【文章內容簡介】 ional accounting standards (., those of Italy) allow flexibility for the capitalization of Ramp。D costs when some conditions are satisfied. These are conditions similar to those required by IAS. 5 The capitalization of Ramp。D costs has always been a controversial accounting issue. Supporters of capitalization report results suggesting that Ramp。D is a longlived asset that influences future profitability (., Bublitz and Ettredge, 1989, January。 Sougiannis, 1994, January。 Ballester et al., 2021). Also, Ramp。D costs are positively related to market value (Hirschey and Weygandt, 1985, Spring。 Shevlin, 1991, January。 Sougiannis, 1994, January) and yield valuerelevant information to investors (., Aboody and Lev, 1998。 Lev and Zarowin, 1999。 Healy et al., 2021。 Monahan, 2021). Supporters of expensing are fewer. They stress the lack of reliable evidence of future economic benefits (., FASB, 1974。 Association for Investment Management and Research, 1993。 Kothari et al., 2021) or refer to the benefits of consistency and parability, pointing out that such benefits trump the costs identified by the supporters of capitalization. Additionally, reliability and the risk of earningsmanagement policies are underscored by supporters of the most conservative accounting treatment. In particular, expensing is preferable to capitalization because it increases the objectivity of financial statements. That is, it eliminates the opportunity for managers to capitalize costs of projects that have low probabilities of success or to delay impairment of Ramp。D assets ( Nelson et al., 2021。 Schilit, 2021). The debate surrounding the most effective accounting method for Ramp。D costs supplements other literature that examines the tradeoff between relevance (., the predictive ability) and reliability (., the representative faithfulness) of accounting information (FASB, 1980。 AICPA, 1994。 IASB, 2021。 IASB, 2021). Thus far, empirical research on Ramp。D costs has focused mainly on the relevance side of the tradeoff, while little has been written about the reliability side that is, the possibility that Ramp。D costs are subject to earnings management. However, a few studies have indeed shown that Ramp。D expenditures are subject to real earnings management. In short, this means that panies cut their Ramp。D investments in order to achieve their earnings goals (., Perry and Grinaker, 1994。 Bushee, 1998。 Mande et al., 2021). But there is still a paucity of research that explores the motives behind the accounting treatment of Ramp。D costs within a setting where flexibility is allowed. Testing whether panies engage in earnings management through Ramp。D cost accounting can significantly contribute to the debate around the best treatment for such costs. This debate has recently been raised within the convergence project by US GAAP and IAS/IFRS. Illustrating that Ramp。D cost capitalization is motivated by incentives to manipulate earnings would support the current . GAAP position, which does not allow the capitalization of such costs. On the contrary, showing that panies do not use Ramp。D cost accounting for earningsmanagement purposes would support the approach now stated by IAS/IFRS, in which capitalization is allowed under certain conditions. This study contributes to this debate by providing empirical evidence on the motivations for Ramp。D cost capitalization. We hypothesize that the decision to capitalize Ramp。D expenditures is related to two primary motivations: ine smoothing and debt contracting. We test our hypotheses using a sample of firms listed on the Milan Stock Exchange. Multivariate results indicate that firms use capitalization of Ramp。D costs to smooth earnings, while there is no support for the debtcovenant hypothesis. These results are robust within a variety of firm characteristics, such as firm size, risk, opportunities for growth, profitability, governance characteristics, industrial membership, and time co