Research On The Value Relevance Of R&D Expenses

With the development of the economy, people pay more attention to the function of the knowledge on economic social promotion. It’s our national development strategy that relying on technological progress to promote economic development. More and more companies are depending on the strength of innovation and technology. Innovation becomes the key factor to judge a company has a potential growth in the future. When evaluate the value of a firm, the investors should pay attention to the expenditures of R&D (research and development), and it means that the information of R&D reflect the stock prices for the firm, therefore based on the above view, the value relevance of R&D of the research becomes a hotspot. First, this paper did a research on the value relevance of R&D domestic and overseas, then analyzed the achievements on this field, and made a contract of the different conclusions by the antecessors. Thus, the author decided to choose the Ohison price model as the study tool in this paper, which is a frequently-used tool on research value by researchers. After analyzing the information of R & D of financial accounting standard among US, international and China, the author found out that China is facing relatively great challenge on the study of the value relevance of R&D for that it hadn’t enforcement of the R&D information before. And there exist a fact that poor quality and incomplete after enforcement publish of the R&D information. After further study on theoretical analysis, the author based on collecting the data of pharmaceutical companies’R&D listed in Shanghai and Shenzhen form 2012 to 2013, then exclude incomplete data, and choose the company stock value as the dependent variable, take the proportion of modified intangible assets and the R&D intensity as independent variables, earnings per share, net assets and such factors as control variables, and study the relationship between R&D expenses and the corporate value. From the study method of the regression analysis, the author found that there was no value relevance between the corporate stock price and R & D expenditure, the study showed there has a strong relationship in the corporate stock price and EPS, however, there has no relationship between such as the other factors of accounting information and representative of share price for a corporate value. The reasons for the above conclusion is that our capital market still in weak market, the low proportion the R&D, or uncertain in transforming to productivity and so on factors lead to the information of R & D expenditure had been ignored in the capital market by the investors.