Title

The impact of different accounting reporting methods on the informativeness of research and development costs: IFRS compared to U.S. GAAP

Document Type

Article

Publication Date

12-1-2016

Subject Area

ARRAY(0x563922976af8)

Abstract

In this paper, we examine the information content and value relevance of research and development (R&D) costs before and after the SEC eliminated the 20-F reconciliation to U.S. GAAP for Foreign Public Issuers (FPIs). Prior to the elimination both FPIs and U.S. firms experienced an increase in the indirect effect of R&D on operating income. After the requirement was eliminated, the direct effect increased for FPIs and the indirect effect decreased. This is in contrast to U.S. firms who experienced a continued increase in the indirect effect. This shift indicates there was a loss of informativeness in the R&D disclosures for FPIs.

Publication Title

Review of Pacific Basin Financial Markets and Policies

Volume

19

Issue

4

Digital Object Identifier (DOI)

10.1142/S0219091516500259

ISSN

02190915

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