The Empirical Study On The Market Reaction To The R&D Expenditure And On The Influencing Factors To R&D

Competition is one of the characters of the market economy. With the quickening of world economy and the fury of market competition, the enterprises of our country have realized that the researching and development activity (R&D) is just the basic and the key to form and advance their core competition ability. Because of its importance, the academia is still disputing that the R&D expenditures should be capitalized or be expensing. On 18th,Jan.,2001, our treasure department enacted the accounting standards of intangibles, and asked all the firms to expense their R&D expenditures. We think that only the investors identify the R&D expenditures, the cost has the meaning of being capitalized, otherwise it should be expensing. To do that, we build up two regressing models, one is the relationship between R&D expenditures and the stock price, another one is the influencing factors to R&D expenditures.By empirical study, we found that there is no significant relationship between R&D expenditures and the stock price. It implies that the investors do not identify with the R&D expenditures of firms. It has also proved that the rules of expensing R&D expenditures are consistent with the realism of our country. And, the leadership structure and the return of assets had obviously positive effect to the researching and development activity, while the size of firm and the rate of intangible assets affected R&D activity negatively.At last, this paper gives some material advice, such as complete the accounting system, together with the accounting standards, improve the investors level, push the investment on the R&D activity of firms.