The purpose of this study is to examine whether the disclosure details under Korean Accounting Standards No. 7 (Capitalization of Borrowing Costs) serve as significant information that affects the judgments and decision-making of information users, using stock return and residual income models. Specifically, this study tests whether the explanatory power (R²) of EPS for stock returns and the explanatory power (R²) of financial figures for firm value are affected by the materiality of the difference amounts disclosed in the notes. The research hypothesis that when the difference between income under capitalization and income under expensing of borrowing costs is material, there would be differences in the explanatory power (R²) of EPS for stock returns and the explanatory power (R²) of financial figures for firm value was rejected. That is, when using financial figures recorded under capitalization of borrowing costs versus those recorded under expensing, there was no difference in the explanatory power (R²) of earnings per share for stock returns or in the explanatory power (R²) for firm value using the residual income model. The research hypothesis that when the difference between income under capitalization and income under expensing of borrowing costs is immaterial, there would be no difference in the explanatory power (R²) of EPS for stock returns and the explanatory power (R²) of financial figures for firm value was accepted. That is, when testing the explanatory power (R²) of earnings per share for stock returns and the explanatory power (R²) for firm value using the residual income model with financial figures recorded under either capitalization or expensing of borrowing costs, no difference was found. The results of this study showed that when the explanatory power (R²) for stock returns and firm value was tested using financial figures expected to be disclosed under capitalization of borrowing costs, there was no difference in explanatory power (R²). These results suggest that the financial information disclosed pursuant to the discretionary accounting treatment provisions under Korean Accounting Standards No. 7 "Capitalization of Borrowing Costs" (differences in net income, assets, equity, etc., resulting from accounting choices) does not significantly affect the decision-making of investors and creditors. Through this study, the following implications are drawn: First, since the financial figures recorded in the respective financial statements due to the elective accounting treatment of borrowing cost capitalization show no difference in explanatory power (R²) for stock returns and firm value, decision-making may be distorted if firm value is judged solely through financial ratio analysis based on financial figures disclosed merely in the notes. Second, since the elective accounting treatment under Korean Accounting Standards No. 7 (Capitalization of Borrowing Costs) shows no difference in the explanatory power for firm value, legitimacy can be granted to the elective accounting treatment standards for borrowing cost capitalization. Third, the finding that financial figures resulting from differences in accounting treatment do not show differences in explanatory power for firm value and stock returns provides empirical evidence for reconsidering the mandatory provisions for note disclosures.