1 Introduction We investigate the effects of enforcement on the informativeness of R&D capitalisation for firms reporting under IFRS. Based on the capitalisation criteria in IAS 38, which assess technical and commercial feasibility, only development costs of R&D projects that meet the stringent conditions are capitalised.1 Therefore, managers' capitalisation decisions are expected to convey information about the likelihood of future economic benefits of R&D projects that will flow to the firms.
