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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Value relevance of R&D in the UK after IFRS mandatory implementation
Author(s): Tsoligkas, Fanis
Tsalavoutas, Ioannis
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Keywords: value relevance, R&D, IFRS, UK
Issue Date: 2011
Date Deposited: 23-Jan-2013
Citation: Tsoligkas F & Tsalavoutas I (2011) Value relevance of R&D in the UK after IFRS mandatory implementation. Applied Financial Economics, 21 (13), pp. 957-967.
Abstract: Following International Financial Reporting Standards (IFRS) mandatory adoption in 2005, the criteria determining the accounting treatment of Research and Development (R&D) expenditure have changed for UK listed companies that publish consolidated financial statements. Therefore, recent literature raises concerns about the value relevance of R&D assets and expenses in the UK, after 2005. Using very recent data, we respond to these calls for research. Adding to the absence of prior evidence regarding the pre-IFRS period, we find that the capitalized portion of R&D is significantly positively related to market values, suggesting that the market perceives these items as successful projects with future economic benefits. R&D expenses are significantly negatively related to market values under IFRS, supporting the proposition that they reflect no future economic benefits and thus they should be expensed. Also in contrast with evidence regarding the pre-IFRS period, R&D expenses are negatively value relevant only for large companies. Accordingly, we argue that transition to IFRS does have implications on the valuation of R&D expenditure in the UK.
DOI Link: 10.1080/09603107.2011.556588
Rights: This item has been embargoed for a period. During the embargo please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study. This is an Author's Accepted Manuscript of an article published in Applied Financial Economics, Volume 21, Issue 13, 2011, pp.957-967 copyright Taylor & Francis, available online at:

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