Research On Value-relevance Of Development Expenditures

There are many reasons why Chinese enterprises lack a long-term innovation and motivation, low ability to innovate, but the financial accounting system of internal research and development of intangible assets relating to the recognition, measurement and reporting of institutional arrangements, is undoubtedly one of the essential reasons.In February 2006, the Ministry of Finance issued the "Accounting Standards for Enterprises No.6-Intangible Assets", which has changed the technology innovation and R & D expenditure of all the management fees charged to the provisions of the current period, but will be divided into corporate R & D expenditure research phase expenditure and stage of development expenditures, respectively, for cost-oriented, and capitalization. And provides for internal R & D projects at the research stage of the expenditure should be included in the current profit and loss occurs; expenditures during the development phase to meet the specific conditions and can be recognized as intangible assets. The new corporate accounting standards in the accounting of intangible assets newly added a subject of "R & D spending". The subject is used to account research and development intangible assets occurred in the process of expenditures, respectively, the "cost of expenditure" and "capitalized expenditure" for details accounting, debit balance in this subject reflects the company's research and development projects underway to meet the conditions of capital expenditure, in the balance sheet as a long-term assets to the "development expenditure" items listed.Enactment of new corporate accounting standards after the implementation of the development of China's listed companies spending the recognition, measurement and disclosure of information status? The new criteria for intangible assets, whether there were deficiencies, there is less than what and how to improve it? This series of questions to researchers through the development of China's expenditure on the value of the relevance of research to be answered. In summing up research results about the value-relevance of intangible assets at home and abroad, we select the medicine, bio-products industry listed companies as a research object, whose R & D expenditures in China's manufacturing industry account for a larger share, in order to study the 2007-2008 interval, the main use of regression analysis of empirical research methods to study the development expenditures of the business performance and accounting information value-related impacts. This paper attempts to target specific industries, to get new sample data after the new accounting standards promulgated, to collect more relevant information on R & D expenditures, to give a more robust study on the value-relevance of development expenditures of Chinese listed companies, in order to make a useful theoretical exploration to the value-relevance of development expenditures.This study finds that:(1) In the empirical study on development expenditures' contributions to the operating results in the medicine, bio-products industry listed companies, we find that incremental development expenditures does not have significant effect on enterprises operating performance of that year, while has a significant positive effect on the future operating performance (the following year operating profit), which indicates that the development expenditures' contributions to the operating results with a lag.(2) Stock price model based on empirical study finds that, there is a positive relationship between development expenditures per share and the company's stock prices in Chinese medicine, bio-products industry listed companies, but this positive effect was not statistically significant, that is derived development expenditures per share does not have a significant effect on price of the shares of listed companies.(3) Test based on Tobin's Q about correlation robustness on the value-relevance of development expenditures finds that, development expenditures of Chinese medicine, bio-products industry companies have a positive impact on the Tobin's Q of current year, as well as the future value of enterprise(Tobin's Q of the following year), but this impact is not statistically significant, there is no evidence that the disclosure of development expenditures significantly improve or damage the enterprise value. Innovations and contributions are as follows:(1) On a new research perspectives. Study period begins from 2007, we inspected V medicine, bio-products industry R & D expenditure information disclosure of listed companies, and the development expenditures' influence on business performance and the value-relevance of accounting information since the new guidelines for intangible assets was promulgated in 2006, in order to provide the empirical evidence for further modifying and improving accounting standards for enterprises.(2) Operating profits and Tobin's Q of two different types of indicators are used in the design of the research model. We try to use Tobin's Q as dependent variable to make an exploratory test on the value-relevance of development expenditures, which is used as new ideas and perspectives to measure the value-relevance of development expenditures. (3) Conclusions of the study are innovative. The empirical results are not entirely consistent with the previous domestic research conclusions on value-relevance of intangible assets. Reasons for the differences may be that previous studies did not distinguish among industries, among breakdown of intangible assets, but tested intangible assets in general on the overall performance of the listed company, while this study is just confined to the development of expenditure items of medicine, bio-products industry listed companies; Meanwhile, this test period is due to the length restrictions, we can not test development expenditures' impact on operating performance more in a longer-term. Future study on the value-relevance of development expenditures should distinguish among industries, and the design should be of a more long-term test in order to ensure the reliability and robustness of conclusions of the study.