Abstract
Purpose – The purpose of this paper is to provide empirical evidence on the level of research and development (R&D) reporting practices by public listed companies (PLC) in Malaysia. R&D activities initiated by a firm are an important signal for a firm's potential future value‐creation. Due to the uncertain nature of the outcomes of R&D, many companies report R&D costs as an expense. These costs are immediately written off from the balance sheet. However, this practice underestimates the intellectual capital accumulation of the firm and does not accurately capture its equity strength.Design/methodology/approach – The PROBIT model was used to empirically evaluate the R&D reporting practices among PLCs in Malaysia. The impact of total assets, and profit before tax on the R&D reporting patterns among Malaysian PLCs were also investigated. This study was conducted on 230 PLCs from the Main Board of Bursa Malaysia (previously known as the Kuala Lumpur Stock Exchange) for the 2004 reporting year.Findings – Empir...
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