TY  - JOUR
AB  - Purpose Fundamental shifting of the world toward intangible intensive economy raised an apprehension regarding value relevance of internally generated intangible assets. In the previous studies, research and development (R&D) expenditure is recognized as a significant accounting item, which can indicate potential internally generated intangible assets. This study aims to examine whether investors consider nature of intangible intensity of a firm for the evaluation of R&D expenditure to determine equity values in India.Design/methodology/approach The authors compared value relevance of capitalized and the expensed portion of R&D expenditure between intangible- and non-intangible-intensive firms. They adopted empirical model grounded on the generalized version of Ohlson’s (1995) model.Findings The findings of the study indicate that, in intangible-intensive (non-intangible) firms, the capitalized portion of expenditure is positively (negatively) significant and the expensed portion of R&D expenditure is negatively (positively) significant to explain equity values.Practical implications The findings of this study may have potential implication for the discussion on the accounting treatment of internally generated intangible assets based on the nature of intangible intensity of the firm. The study also suggests that while setting standards, standard-setters should consider nature of intangible intensity of the firm, which could disseminate the discrepancy between the market and book value of the equity.Originality/value The study provides evidence, how value relevance of R&D reporting is affected by the nature of intangible intensity of a firm.
VL  - 17
IS  - 3
SN  - 1985-2517
DO  - 10.1108/JFRA-08-2017-0073
UR  - https://doi.org/10.1108/JFRA-08-2017-0073
AU  - Kumari Pooja
AU  - Mishra Chandra Sekhar
PY  - 2019
Y1  - 2019/01/01
TI  - Value relevance of R&D reporting in India: significance of intangible intensity
T2  - Journal of Financial Reporting and Accounting
PB  - Emerald Publishing Limited
SP  - 432
EP  - 448
Y2  - 2024/05/07
ER  -