| In this study, I investigate how discretionary choices of accounting methods for R&D affect the value relevance of financial statement information. Studying accounting method choice contributes to the ongoing debate about standard setting in the areas of R&D and intangibles accounting. While prior studies in these areas primarily focus on comparing the information advantages of uniform accounting methods (e.g. the capitalizing vs. the expensing method), I explore the possibility that accounting choices in a discretionary context reflect value relevant information. My results suggest that firms choose accounting methods that are most informative of their values and that there is no information advantage of any one accounting method being imposed uniformly. |
