摘要：The capitalization of research and development (R&D) costs is a controversial accounting issue because of the contention that such capitalization is motivated by incentives to manipulate earnings. Indonesian Financial Accounting Standards (SAK) allows for the capitalization of R&D costs. Based on a sample of manufacturing companies of Indonesia Stock Exchange from 2009 to 2011, this study examines whether companies’ decisions to capitalize R&D costs are affected by earnings-management motivations such as earnings smoothing and to avoid violating debt-covenant. In addition, this study aims to show that the capitalization of R&D costs affects the level of firms’ earnings-management. Using a Tobit regression model to test the first and second hypotheses and linear regression model to test third hypotheses, the results show that the companies do capitalize the R&D costs for earnings-smoothing and reducing the risk of violating debt-covenants purposes. In addition, the results show that the capitalization of R&D cost affects the level of firms’ earnings-management and it is a part of earnings management.
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