This paper analyzes the capitalization of Research & Development (R&D) expenditures under IFRS. Discretionary R&D capitalization can be exercised by managers to signal private information on future economic benefits to the market. It can, however, also serve as opportunistic earnings management....

The highlights section in the annual report provides an opportunity for firms to emphasize specific performance measures and sets the tone for the rest of the annual report. Based on a sample of the top 200 Australian firms, we find that companies rely on non-IFRS earnings to supplement...