Determinants of Accounting Policy for R&D Costs

연구개발에 대한 회계정책 결정요인 분석

This study investigates the factors determining accounting method for R&D costs (capitalizevs. expense) in Korea. Using agency theory and other economic factors, probit and regression model have been developed to distinguish between firms choosing different accounting alternatives for R&D costs. The results are consistent to debt contract, R&D burden and regulation hypotheses both in probit and regression analysis. The size variable has opposite sign in univariate t-test and probit analysis, which may be due to the differences of political environment between Korea and the US. Generally, the results are consistent to those of previous research. The evidence suggests that larger firms with higher leverage and larger burden of R&D costs are more likely to capitalize R&D costs, while regulated firms are more likely to expense R&D costs.