Market Competition Intensity?R&D Expenditure And Earning Persistence

R&D activities are important for enterprises to improve production technology,launch new products,and finally realize the sustainable development.There are many factors affecting the R&D activities.Under the market economy,the market competition intensity is one of the most influential factors taken into consideration.Previous studies have indicated that the intensity of market competition is able to affect the corporate governance,and then the allocation of resources,and ultimately the expenditure of R&D activities.In addition,R&D activity is an important means for enterprises to improve production technology in order to improve production efficiency,reduce production costs,launch new products to maintain or compete for market share,and open up new markets.There is no doubt that the R&D activities have a big influence in the company's current main business performance to the next term,in other words,R&D activities affects earnings persistence.The previous research on the impact of R&D expenditure on corporate earnings is mainly focused on the impact of capital cost of R&D expenditures on earnings management.Previous study shows that before the implementation of China's "enterprise accounting standards",the enterprise conduct earnings management through the real R&D transactions,so that the level of earnings achieve the target ones.After the implementation of "enterprise accounting standards",in addition to limiting transactions,adjusting the time of when capitalize R&D expenditure is another way for corporates to manage earnings.On one hand the enterprise have to adjusting the happened R&D expenditure in order to achieve the earning targets;on the other hand,enterprises must consider the effect of R&D activities from the point of corporates' sustainable development,make decisions like developing new products which decides the amount of R&D expenditures from the general.At present,researches on relationships of R&D expenditure and market competition intensity are abundant,but they do not reach a consensus.The paper aims to find out such relationship by using the latest information companies disclose.Many researches focus on earnings persistence,but few of them pay attention to relationship between R&D expenditure and earnings persistence.Based on the existing papers,combined with logical reasoning,this paper tries to find such relationship.Meanwhile,this paper take the market competition intensity as a moderating variable influencing the relationship between R&D expenditures and earning persistence.This paper uses the main methods of earning persistence research:the first order autoregressive model test hypothesis,and takes 2011-2015 listed companies in manufacturing industry as the research objects,according to the division of the 9 sub sectors of the Commission,leading to three conclusions:1.Market competition intensity has an inverted U type influence on R&D expenditure;2:R&D expenditure has a positive influence in promoting total profits persistence in less competitive markets,but not in a highly competitive markets.3.R&D expenditure has a significant promotion effect in operating profit persistence,which becomes stronger in a less competitive market.This paper aims to provide support for R&D activity decisions,and helps the government to regulate the market structure and make incentive policies,by leading to those conclusions above.This paper is divided into 4 parts.The first part introduces the research background,objects.The second part reviews the relevant papers on the topic of market competition intensity,R&D expenditure and earning persistence.The third part,combined with the relevant theory,the existing papers and logical reasoning,brings up and tests hypothesis.Finally,this paper summarizes the conclusions of this paper,analyzes the shortcomings of this paper,and looks forward to research direction in the future.