And the Conflicting Forces that Shape Financial Accounting: An Empirical Analysis
3 Research Question and Methodology
Section 3 develops the research question of the thesis and further introduces to the methodological fundamentals required to empirically investigate this re- search question. The thesis as a whole is motivated by investigating the question if measures of R&D capital according to IAS 38 (1) provide relevant informa- tion for equity markets, at the same time, however, (2) involve only an accepta- ble degree of uncertainty. This investigation is in the spirit of the trade-off be- tween relevance and reliability of financial accounting information. As elabo- rated in section 2 on related literature, section 4 of the thesis contributes to value relevance literature and section 5 to the literature on the uncertainty of future benefits from R&D. Therefore, section 3.2 introduces to the methodological background of value relevance literature as well as of the literature on the uncer- tainty of future benefits from R&D. 3.1 Research Question This section develops the research question of the thesis. As elaborated in sec- tion 2.3 the thesis contributes to existing literature by investigating the impact of the accounting treatment of R&D outlays according to IAS 38 on aspects of re- levance as well as aspects of reliability. The differing information needs of equi- ty and debt investors add further complexity to the trade-off between relevance and reliability. This is because both groups interpret relevance and reliability differently due to their differing information needs. Therefore, this section starts with a brief explanation of the information needs of equity and debt...
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