@article{article_745153, title={DIRECT AND INDIRECT VALUE RELEVANCE OF R&D CAPITALIZATION}, journal={İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi}, volume={19}, pages={781–802}, year={2020}, author={Ertuğrul, Melik}, keywords={Değer İlişkisi,Aktifleştirme,Aktifleştirilen ARGE,Araştırma-Geliştirme}, abstract={<p>The accounting treatment of R&D investments has been an open and contentious discussion as certain accounting regimes eliminate capitalizing and require immediate expensing while capitalization of R&D investments satisfying all necessary criteria is mandatory in IAS 38. By analysing a sample of listed firms on Borsa Istanbul over 2009-2018, we shed light on the impact of capitalized R&D investments on i) market values, and ii) the value relevance of book value of equity and earnings. We define the former (latter) as the direct (indirect) value relevance. By revealing a significantly positive association between capitalized R&D investments and market values, we conclude that capitalized R&D investments are directly value relevant. Furthermore, the value relevance of earnings (book value of equity) increases (remains unchanged) as capitalized R&D investments increase. These outcomes are consistent with our expectations and the outcome for earnings provides evidence for the indirect value relevance of capitalized R&D investments. <br /> </p>}, number={37}, publisher={İstanbul Ticaret Üniversitesi}