An Empirical Study Of The Impact Of Changes In The Accounting Treatment Of R&D Expenses On R&D Investment

In information economy era, technological innovation is essential to promote the progress of science and technology development, and it is the key factors of the core competitiveness. With the constant improvement of relevant rules and regulations, and the gradual strengthening in policy guidance, our research and development intensity is gradually increasing. As everyone knows, R&D is the main form of technological innovation. Chinese enterprises is participating more activities in R&D (research and development) investment positively, and is becoming the main force in R&D activities increasingly. In order to promote the enterprises to increase their R&D investment and enhance their independent innovation capability, in2007, China implemented " Accounting Standards for Business Enterprises No.6-Intangible Assets"(referred as the new guidelines hereinafter) formally. Its basis is the release of "Accounting Standards for Business Enterprises No.6-Intangible Assets"(referred as the old guidelines hereinafter) in2001. The new standard is the revised and improved old standard. New standard is a milestone in the process of convergence with the International Accounting Standards constantly.Among these, the new accounting standards on the treatment of intangible assets R&D expenses has more value relevance due to transiting from all the expenses to the conditional capitalization. Most academic scholars and experts believe that the new standards will help to eliminate short-term behaviors of enterprises, to increase business investment in science and technology. So it results in a substantial increase the profits in technological and innovative corporations. However, conditionally capitalizing R&D expenses can really produce a positive effect as people has expected? Can it really promote the enterprises to increase their R&D investment? This becomes a major issue of this study.This paper analyses the current situation of R&D investment mainly, and makes some sort about the influencing factors. It focus on exploring the impact of R&D intensity from the perspective of the changes in accounting standards. As the manufacturing industry always occurs more R&D activities, we select China’s manufacturing and information technology industries (based on the CSRC industry classification standard in2012) listed companies as samples. Then we use an regression model to do empirical test. First, we put in order the literature review concerning what factors can affect R&D investment the relationship, and the relationship between conditionally capitalizing R&D expenses and corporate R&D investment. Next, the theory of R&D investment is analyzed thoroughly in this paper. Again, this paper stresses the empirical test. We classify the total sample by high-tech industries and traditional industries.And then we compare how different types of listed companies are affected by the changes in R&D treatment method. At the same time, the total sample is divided into state-owned listed companies and non-state-owned listed companies in the model. The aim of doing this is to study how different types of companies with different ownership are influenced by the changes of the standard. In the specific analysis, we analyze and evaluate the results of the empirical findings based on the theoretical system in the third part. After in-depth theoretical and empirical research and analysis, this article concludes that the empirical results support the theoretical assumptions. Namely, the changes in accounting treatment of R&D expenses promote the increasing of corporate R&D investment. In the meantime, the results also verifies that the high-tech industry is affected deeper compared with traditional industries. They are not affected in the same degree. The change in R&D investment is greater in high-tech industry. Furthermore, the R&D investment in non-state-owned listed companies is significantly higher than the state-owned listed companies.The significance of this study lies in that studying the changes in the accounting treatment of R&D expenses enriches the accounting standard’s research perspective from the theoretical point of view. The changes in the accounting treatment of R&D expenses will have a direct impact on corporate R&D investment. The studying in domestic is largely on the theory concerning the influence on technology innovation. There is little empirical studying from the direction of accounting standards on the impact on enterprises technological innovation until its influencing on companies. Therefore, this study contributes to enriching and developing the theory of intangible assets. Looking from the practical significance, this study also has a strong timeliness and necessity. By exploring how to effectively execute the new accounting standard, the relative department can guide enterprises in technology management units with proper accounting choices, and provide a reference for more companies. It can also assist enterprises avoid problems, keep a smooth transition when the changes in the accounting standard occur. Thus, this may achieve the aim that the technological power will boost our country. The development of enterprises can lead to the economic development. The development of enterprises is restricted and influenced by the accounting standards. Therefore, economic development requires the coordination with the accounting system. Based on accounting standards should beneficial to the corporations, the social and technological progress and the economic development, according to first-hand information from the evidence and data, then we can provide reference to the standard-setting bodies to develop more comprehensive accounting standards. The innovation of this paper is that we not only test the impact on corporate R&D investment due to the changes in the accounting standard by using the empirical method, but also distinguish the high-tech industries and traditional industries, the state-owned enterprises and non-state-owned enterprises, and then test how their R&D investment intensity is impacted in different degrees thanks to the change in R&D expenses accounting treatment by doing empirical studying.