The significance of R&D reporting as an element of corporate governance - Normative implications and empirical evidence from Germany

Abstract

Investment activity in research and development (R&D) represents a central component of a company policy directed toward shareholder value maximation. This article discusses business reporting about the corporate R&D activity, in which in addition to the depiction in the (consolidated) balance sheet the authors concentrate on the management reporting. As a result of the restrictions on recording R&D ex-penditures in the balance sheet according to the German law ("Handelsgesetzbuch" (HGB)) and the In-ternational Financial Reporting Standards (IFRS), (consolidated) management reporting as the informa-tion interface between financial accounting and voluntary value reporting takes on a key position in cor-porate governance.