Abstract (EN)

Accounting for research and development (R&D) costs is an open issue. SFAS n°2 mandates that all R&D costs are immediately expensed. International standards prescribe a capitalization of R&D costs if they meet certain criteria (IAS 38). The cost method is perfectly objective and verifiable. The capitalization of R&D costs may be used to convey information but is also less reliable. There is a trade off between reliability and objectivity. Nevertheless recent research papers (Healy, Howe and Myers, 2002; Lev and Sougiannis, 1996, 1999; Aboody and Lev, 1998) show that capitalization of intangibles (R&D costs and software development costs) is value relevant. However critics can be leveled at this result because their empirical tests are based on simulated or partial data. Our purpose is to test empirically R&D accounting issues on a sample of European firms. Many European accounting regulatory bodies authorize both accounting treatments for R&D costs: expensed as incurred or capitalized and amortized. First, we study the factors influencing the choice of an R&D accounting method. Secondly, we examine the value relevance of earnings and book values according to the R&D accounting treatment. This paper extends previous literature by using real data on capitalized R&D, instead of estimated data. Moreover hypotheses are tested in a European institutional environment whereas previous studies were carried out on US firms. Finally, we introduce measures of value relevance not commonly used in the field of Intangibles.