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

Michael Timothy Dugan, John E. McEldowney, Elizabeth H. Turner, Clark M. Wheatley

Research output: Contribution to journalArticle

3 Citations (Scopus)

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.

Original languageEnglish (US)
Article number1650025
JournalReview of Pacific Basin Financial Markets and Policies
Volume19
Issue number4
DOIs
StatePublished - Dec 1 2016

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Informativeness
International Financial Reporting Standards
Costs
Indirect effects
Direct effect
Reconciliation
Income
Value relevance
Disclosure
Information value
Information content

Keywords

  • Accounting quality
  • IFRS
  • Research & development
  • U.S. GAAP

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

The impact of different accounting reporting methods on the informativeness of research and development costs : IFRS compared to U.S. GAAP. / Dugan, Michael Timothy; McEldowney, John E.; Turner, Elizabeth H.; Wheatley, Clark M.

In: Review of Pacific Basin Financial Markets and Policies, Vol. 19, No. 4, 1650025, 01.12.2016.

Research output: Contribution to journalArticle

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