eThesis - School of Business electronic theses

RESEARCH OBJECTIVES:

This thesis studies how the value relevance of intangible assets and R&D expenditures is affected by the financial crisis and which are the main factors for the observed effect. The thesis aims to show whether an increase in the frequency of negative earnings, changes in earnings management incentives and earnings management are reasons for explaining the changes in value relevance during the financial crisis.

DATA:

The empirical data is gathered from databases available through Thomson One Banker. The main sample consists of 3546 firm-year observations from years 2006 - 2011. The sample is gathered from countries which joined EU before 2006. Financial firms are excluded from the sample. All firms reported under IFRS.

RESULTS:

The main findings of the study are that the value relevance of intangible assets was lower during the crisis than before the crisis and the value relevance of R&D expenditures was lower during the crisis than after the crisis. The decrease in value relevance can be attributed to a decrease in reliability for both intangible assets and R&D expenditures. Main driver for the observed changes in value relevance seem to be the unprofitable firms. For intangible assets there might be other weak unidentified factors present. No evidence on the effect of earnings management to value relevance was found.