Exploring investor views on accounting for R&amp;D costs under IAS 38

Mazzi, Francesco; Slack, Richard; Tsalavoutas, Ioannis; Tsoligkas, Fanis

doi:10.1016/j.jaccpubpol.2022.106944

Cited by 22 publications

(26 citation statements)

References 69 publications

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“…Naturally, IAS 38 follows this course and poses a high bar for when intangible assets (in particular, development costs) should be recognized in the financial statements of entities. This supports the forming of two logically opposing sides which can be observed in a study of Mazzi et al (2022). The first side defends the argument that entities should be facilitated in the process of capitalization of development expenditures.…”

Section: The Conservatism Of Ias 38supporting

confidence: 75%

“…This, of course, has been enhanced by the current COVID-19 crisis. Mazzi et al (2022) explore investors' views on accounting for R&D and how they affect their process of decision-making. They conducted 17 interviews with buy-side and sell-side investors in order to determine what is the level of usefulness of the disclosed R&D accounting information.…”

Section: The Role Of Ias 38 and Intangible Assets Nowadaysmentioning

confidence: 99%

“…The standard has been revised and amended by the IASB (both in 2004 and 2014), but it still preserved its conservative nature. The six criteria for capitalization of development costs come as a proof of this -they remained practically unchanged since 1997 when they were established in IAS 9 (Mazzi et al, 2022). Nonetheless, IAS 38 appeared to be of a more conservative nature since it required the entity to assess the future economic benefits which are expected from the asset using IAS 36 "Impairment of Assets" as basis (Davies er al., 1999 cited in Mazzi et al, 2022).…”

Section: The Conservatism Of Ias 38mentioning

confidence: 99%

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Reporting of R&D Costs Under IAS 38 – The Case of Biopharmaceutical Companies

2022

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The objective of the paper is to provide insights into the effects of IAS 38 on the financial information provided by companies operating in the biopharmaceutical industry, taking into account the increased expenditure on research and development activities during the COVID-19 pandemic. Financial reports for 2019 and 2020 of BioNTech SE (the company responsible for the development of one of the authorized COVID-19 vaccines) are analysed and given as an example for how the capitalization and expensing of R&D costs affect the information provided by entities. Example for improvement of the R&D accounting treatment is presented in the case of IFRS 6 “Exploration for and Evaluation of Mineral Resources”.

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Section: The Conservatism Of Ias 38supporting

confidence: 75%

Section: The Role Of Ias 38 and Intangible Assets Nowadaysmentioning

confidence: 99%

Section: The Conservatism Of Ias 38mentioning

confidence: 99%

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Reporting of R&D Costs Under IAS 38 – The Case of Biopharmaceutical Companies

2022

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“…The second example is Mazzi et al. ’s (2022) examination of the views of analysts on the capitalisation of development costs, which finds that they broadly support capitalisation while finding the criteria for capitalisation in the relevant standard unsatisfactory.…”

Section: Building Accounting Knowledge Of Intangiblesmentioning

confidence: 99%

“…The paper by Mazzi et al. (2022) referred to in section 3.1 raises an intriguing question about the evolution of accounting conceptualisation.…”

Section: The Evolution Of Accounting Knowledge Of Identifiable Intang...mentioning

confidence: 99%

A pragmatist neoclassical accounting research agenda for identifiable intangibles

Rutherford¹

2023

JAAR

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PurposeThis paper offers a way of revivifying classical accounting research in the form of a pragmatist neoclassical programme with a sound epistemological underpinning.Design/methodology/approachThe paper draws on a pragmatist perspective on financial accounting and accounting research springing from John Dewey's theory of inquiry.FindingsAlthough a pragmatist underpinning does not entail specific methodological prescriptions, it can provide fruitful insights in research design. The paper discusses the structure and content of a research programme drawing on a pragmatist underpinning and sets out proposals for a practical research agenda. Although the agenda is shaped around the topic of identifiable intangibles, much of the paper has substantially wider relevance.Research limitations/implicationsThe approach justifies a revival in scholarly research employing classical methods and directed at improving accounting methods and standards.Practical implicationsThe approach would promote closer engagement between scholarly accounting and practitioners such as standard-setters, making some contribution to closing the widely acknowledged gap between research and practice.Originality/valueThe paper offers a neoclassical programme of research drawing considerably more extensively on pragmatist philosophy than did theorisation in the classical period.

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Real effects of capitalized research and development expenditures: a leading indicator for future innovation performance?

Herb,

Lotze,

Schultze

et al. 2024

Rev Quant Finan Acc

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This paper analyzes the relationship between capitalized Research and Development (R&D) expenditures under IFRS and innovation performance measured by patent data. Under IFRS, development expenditures are capitalized when the success of an R&D investment is highly likely. Hence, such capitalization could be a leading indicator for future innovation performance. We analyze this question based on a hand-collected sample of R&D capitalization data under IFRS and patent data from the European Patent Office’s Worldwide Patent Statistical Database. We find that the capitalization rate of R&D is positively related to future patent applications and citations as measures of future innovation performance. We also find a positive association with measures of future financial performance. The results imply that the rate of R&D capitalization is informative and can be considered a leading indicator for future innovation performance.

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Exploring investor views on accounting for R&D costs under IAS 38

Cited by 22 publications

References 69 publications

Reporting of R&D Costs Under IAS 38 – The Case of Biopharmaceutical Companies

Reporting of R&D Costs Under IAS 38 – The Case of Biopharmaceutical Companies

A pragmatist neoclassical accounting research agenda for identifiable intangibles

Real effects of capitalized research and development expenditures: a leading indicator for future innovation performance?

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