We examine whether managers’ decisions to capitalize or expense R&D expenditures convey information about the future performance of the firm. We show that the decision to capitalize R&D is generally associated with a negative or neutral impact on future performance, even after controlling for self-selection. Our results suggest that management is unable to truthfully convey information about future performance through its decision to capitalize R&D.
JENY, A., JEANJEAN, T. and JOOS, P. (2011). Accounting choice and future performance: The case of R&D accounting in France. Journal of Accounting and Public Policy, 30(2), pp. 145-165.