Characteristics of firms which capitalise development expenditures
Citation:Wang, B. (2006). Characteristics of firms which capitalise development expenditures. Research Project submitted in partial fulfilment of the requirements for the degree of Master of Professional Accountancy, Unitec New Zealand.
Permanent link to Research Bank record:https://hdl.handle.net/10652/2207
This project investigates the characteristics of firms in New Zealand who choose to expense versus capitalise expenditures for internally generated development projects. Using a sample of 315 NZ firm-year observations, I find that the decision to expense versus capitalize is influenced by profitability, financial health and intensity of a firm’s research and development (R&D) programme. Firms which capitalise R&D are smaller, less profitable, more likely to be in financial distress, and have higher intensity R&D programs. These results suggest that New Zealand firms are similar to firms in other countries who seem to make choices among accounting alternatives in a way to manage reported earnings