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R&D treatment could be influenced by earnings management purposes due to the flexibility allowed in the R&D accounting standards. This paper attempts to determine whether discretionary R&D treatments are motivated by financial performance or can be constrained by board independence. The study is conducted on a sample of 410 firm-year French companies investing heavily in R&D in the period 2007-2011 and accounting data are collected from the Worldscope database. Using two logistic regression models, results show that the French companies do not tend to capitalize the R&D expenditures in order to smoothen the results but rather tend to cut the R&D expenditures in order to achieve earnings targets. However, the hypothesis that independent directors reduce R&D manipulation is not supported.
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In-Text Citation: (Guidara & Boujelbene, 2014)
To Cite this Article: Guidara, R., & Boujelbene, Y. (2014). R&D-Based Earnings Management and Accounting Performance Motivation. International Journal of Academic Research in Accounting Finance and Management Sciences. 4(2), 112 – 129.
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