Research On R&D Expenditure Capitalized Earnings Management

In recent years, with the development of economy and the world’s economy has entereda new period. It determines the Chinese economy declines.It requires an enterprise technologytransformation of our country, and it also put the technical reform and innovation to a newheight. China began to implement the new accounting standards in2007for R&Dexpenditures made by the old accounting standards in the "full cost" of adjustment as"conditional capital" of this way is undoubtedly improve the relevance of accountinginformation. But because the policy, there are still nebulous gray area. The companies maytake advantage of this loophole earnings management policy, may decline the reliability ofaccounting information. Therefore, this paper choose the topic-based on the perspective ofearnings management of R&D expenditures for exploration capitalization issues, boththeoretical and practical significance.This paper uses empirical methods.And it uses from2011to2013for all R&D spendingfor non-disclosure of the ST, non-ST*, non-financial listed companies as samples. Thenearnings management issues arising from the treatment of capitalization of R&D expenditurearising are explored. In this paper the R&D expenditures will be divided into the realcapitalized R&D expenditures and the proforma capitalized R&D expenditures. The usingaccrual earnings management model and real earnings management model are used tomeasure the two parts of earnings management.The results of this paper suggest that:(1)Real capitalized R&D does not significantlyincrease accrual earnings management, but the proforma capitalized R&D expendituressignificantly increase accrual earnings management.(2)Real capitalized R&D does notsignificantly increase real earnings management, but the proforma capitalized R&Dexpenditures significantly increase real earnings management. In other words, capitalizedR&D expenditures which eventually did not turn into intangible assets contain the motives ofearnings management, and may decline the quality of accounting information. It should betaken seriously and suppression measures responding to these issues.Finally, in accordance with the results of this article and the problems of our currentaccounting standards, the author proposed several rationalization suggestions.