The impact of different accounting reporting methods on the informativeness of research and development costs: IFRS compared to U.S. GAAP
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.
Review of Pacific Basin Financial Markets and Policies
Digital Object Identifier (DOI)
Michael T Dugan, John E McEldowney, Elizabeth H Turner, & Clark M Wheatley. (2016). The Impact of Different Accounting Reporting Methods on the Informativeness of Research and Development Costs: IFRS Compared to U.S. GAAP. Review of Pacific Basin Financial Markets and Policies, 19(4), 1–.