R&D disclosure in the annual report: empirical evidence from automotive and pharmaceutical companies

Alberto Quagli, Elisa Roncagliolo and Lorenzo Simoni

Chapter 11 in Handbook on Intangibles, 2026, pp 196-218 from Edward Elgar Publishing

Abstract: This chapter investigates how firms disclose information on internally generated intangible assets, with a specific focus on research and development (R&D) expenditures. By examining annual and sustainability reports of 20 leading companies in the automotive and pharmaceutical sectors, the study evaluates the extent and the quality of R&D disclosures, their integration with business model (BM) narratives, and the emergence of future-oriented expenses (FoEx) reporting practices. Despite increasing regulatory attention to intangible asset transparency, the findings reveal inconsistent and often superficial reporting practices across firms and industries. Pharmaceutical companies tend to provide richer narratives and performance indicators, while automotive firms show more variability in both the format and substance of disclosures. The study also identifies limited adoption of FoEx reporting, which is critical for bridging the information gap posed by non-capitalised intangibles. Only a few firms explicitly link non-capitalised R&D spending to future economic benefits. The chapter argues for the development of clearer disclosure standards and a more structured integration of R&D information within BM reporting, particularly to support users’ understanding of the value-generation potential of intangibles. It contributes to the literature on intangibles and financial reporting by highlighting best practices, identifying disclosure gaps, and proposing a phased approach to enhance the transparency and decision-usefulness of R&D-related information.

Keywords: R&D disclosure; Annual report; Intangible assets; Automotive industry; Pharmaceutical industry; Empirical evidence (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035306367
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