An Analysis Of The Relationship Between R&D Activity And Enterprise Value

R&D activity’s value creating process is complicated, dynamic and continuous.Every stage of the process is closely related to value creating. Basing on the technologycapital theory, under the market economy circumstance, only capital could create value.So, only after the technological achievements convert into technology capital, can R&Dactivity create value in the product market. In the meanwhile, only when R&D activitygain the approval of the capital market, can R&D activity enter into a new operatingcycle. So, taking technology capital as the center point, it is of vital importance todiscuss the relationship between technology capital and enterprise financial value andwhether the capital market approve of R&D activity.This study divides enterprise’s R&D activity into three stages-fundamentalresearch stage and development stage, technology capital formation stage andtechnology capitalization stage. Then we discuss the relationship between each stage ofR&D activity and enterprise financial value. Besides that, we also discuss whether thecapital market approve of R&D activity. The thesis includes five chapters. The firstchapter is the introduction. By analyzing the current situation of R&D activity in China,we put forward the main topic of the study and explain the theoretical and practicalsignificance of the study. In the second chapter, we make literature reviews on R&Dinput and output, the relationship between R&D activity and enterprise financial valueand the relationship between R&D activity and enterprise market value. Besides that, inthis part, we also make brief introduction of some theories as the foundation of the study.The third chapter is the research design. Basing on the explanation of the R&D activityprocess and the mechanism of how R&D activity influence enterprise financial valueand market value, we put forward nine research hypothesis, gains the sample statisticsand build four models for empirical study. The fourth chapter is the main part of thethesis. Using the descriptive statistics method, the correlation analysis method and theregression analysis method, we test the hypothesis and analyzes the empirical outcome.The last chapter is the conclusive part of the research. Basing on the research results, weput forward some valuable suggestions and point out the flaws of the study, whichprovides some references for further study.Empirical results of the relationship between R&D and enterprise financial value indicates that the research stage and the development stage are the foundation of theformation technology capital, which do not create value directly. Technology capital isthe core part of financial value creation. But when technology capital enters theproduction process, it shows a negative influence on enterprise financial value, whichsuggests the importance of technology capitalization and the low efficiency of the usageof technology capital in our country. The reason is that the R&D personnel put so muchattention on the pursuit of technological achievements and ignore the quality andpractical value of them. Empirical results of the relationships between R&D activitiesand enterprise market value show that the market doesn’t have much expectations onR&D activities of fundamental research stage and development stage. But it holdsactive attitude towards technology capital. In the meanwhile, the information disclosureof R&D activity of all the three stages will bring positive impact on the stock price,which indicates that timely disclosure of corporate R&D activity information couldtransfer good signal of R&D progress to the market and increase market expectationsand recognition for research and development activities.