Record Details

THE VALUE-RELEVANCE OF R&D EXPENDITURE: EXPERIENCE FROM MALAYSIA

International Journal of Economics, Management and Accounting

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Field Value
 
Title THE VALUE-RELEVANCE OF R&D EXPENDITURE: EXPERIENCE FROM MALAYSIA
 
Creator Taufil Mohd, Kamarun Nisham; Lecturer, Faculty of Finance and Banking, Universiti Utara Malaysia, Sintok, 06010 Kedah, Malaysia (email: kamarun@uum.edu.my)
Wan Nordin Wan Hussin and Ku Nor Izah Ku Ismail, Rohaida Abdul Latif Robiah Abu Bakar; Lecturers, Faculty of Accountancy, Universiti Utara Malaysia, Sintok, 06010 Kedah, Malaysia
 
Description This paper examines the value relevance of R&D reporting among public listed companies in Malaysia for 2000 and 2001, subsequent to the introduction of FRS 109, Accounting for Research and Development (formerly known as MASB 4) which became effective in 1999. Beginning January 2006, FRS 138, Intangible Assets supersedes FRS 109. FRS 138 prescribes that a firm should expense its research costs and could capitalize the development cost as an intangible asset if the latter is expected to bring future benefits. Otherwise, the development expenditure is to be expensed. Test results based on Ohlson’s (1995) valuation model shows that for capitalizers, the amount of R&D expenditure, either expensed or capitalized, influences the stock prices positively. As for the expensers, even though the amount expensed influences stock prices, this relationship is driven by outliers; when we dropped the outliers, the result was no longer significant. These results indicate that R&D activities of capitalizers are expected to bring future benefits and consequently, lead to higher prices while the R&D activities of expensers are more difficult to evaluate given a small sample size and the presence of outliers.JEL classification:M41, O30Key words: Research and development, Value-relevance, Capitalisation
 
Publisher Kulliyyah of Economics and Management Sciences
 
Contributor
 
Date 2013-03-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/124
 
Source International Journal of Economics, Management and Accounting; Vol 14, No 2 (2006)
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/124/105