Accounting for R&D: Evidence and Implications

• 成果类型: Article
• 署名作者: Canace, Thomas G.; Jackson, Scott B.; Ma, Tao; Zimbelman, Aaron
• 署名单位: Wake Forest University; University of South Carolina System; University of South Carolina Columbia; Texas Tech University System; Texas Tech University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12780
• 发表日期: 2022
• 页码: 2212-2233
• 关键词: development investments; earnings management; FIRMS; BIAS

摘要

Accounting rules require that certain R&D expenditures be capitalized, but academic research often states that all R&D expenditures must be immediately expensed. An accurate understanding of actual R&D accounting practices is critical because that understanding influences research questions and design choices. To examine the competing R&D accounting perspectives, we survey 184 experienced financial officers. Our survey reveals that R&D capitalization is common and extensive in practice. Over 90% of respondents indicate that their firm capitalizes at least some R&D expenditures, and our evidence shows that about 22% of annual R&D expenditures are capitalized. When facing an earnings shortfall, respondents indicate that firms are often willing to cut R&D expense. However, respondents also indicate an unwillingness to cut types of R&D expenses that cause long-term harm-for example, laying off scientists or delaying the execution of trials-and they often redirect the freed-up R&D resources to R&D expenditures that are capitalized. Using archival data, we also corroborate our survey finding about the pervasiveness of capitalized R&D, and we demonstrate its empirical implications. Our study helps to align the characterization of R&D accounting rules in the academic literature with the authoritative professional literature and provides a more nuanced understanding of firms' R&D response to an earnings shortfall.