Study Of The Economic Consequences And Factors Of The R & D Expenditure Capitalization

In the modern Era of knowledge economy, as technological innovation is the important source of economic growth, countries in the world see the self-innovation capability enhancement as the core strategic and increase the scientific and technological investments. In order to have the competitive superiority and gain long-term development, enterprises have to improve the ability of the self-innovation. Chinese enterprises start the technological innovation program latter than any other countries, so our innovation capability is still very limited and there are still many weaknesses, such as lack of investment in Research and Development(R&D), lack of our own famous brand, lack of brilliant technicians and so on. The Government of China in order to make sure the enterprises increase the scientific and technological investments, it has taken a lot of measures to promote technological innovation. One of the measures is the change of the Accounting Standards for Business Enterprises (ASBE,2006) about R&D capitalization. This change reduces the concerns of enterprises to some extent, encourages them to invest in R&D so as to increase core competitiveness.In order to test the effect of the R&D capitalization, to see what relative factors have influenced the technological innovation very much. This article will do the research on these questions.This paper collected 65 observations of listed companies between the years 2005-2009. The results of the tests show that there are no differences of technological innovation between the listed years, which mean that the R&D capitalization does not have a positive effect. This paper also conducts a research on the factors which have great influence on the technological innovation. The results show that (1) the listed companies prefer to use the non-monetary assets to improve their financial conditions to financing; (2)the better the companies developed, the more the companies invest in R&D; (3)the higher the earning per share is, the more the companies invest in R&D; (4)the more debt the companies have, the less the companies invest in R&D; (5)the more assets companies own, the more the companies invest in R&D; (6)the more the companies earned, the less the companies invest in R&D, which has to be analyzed in the future; (7)contrast to the state-owned enterprises, private enterprises have more intent to invest in R&D, and so on. Therefore, this paper puts forth some measures.