R&D And Earnings Management Of Pharmaceutical Industry

The principle-oriented R&D standard leads to the space of earnings management.Pharmaceutical industry,as one of the high R&D investment,has long development cycle,high-uncertainty and unknown drug revaluation characteristics,which determines the volatile profit of this industry.And the volatile profit also make the enterprises need more earnings management.Excessive earnings management will affect the objectivity and authenticity of accounting information,so that stakeholders may suffer loss.Therefore,the relationship between R&D expenditure and earnings management in pharmaceutical industry is worth exploring and discussing.The purpose of the paper is to identify the earnings management of pharmaceutical companies through the R&D accounting choice,and put forward the suggestion of R&D information disclosure.This paper will take pharmaceutical company hzyy as a case,start from the motivation of earnings management,then based on the way of information comparison and accounting prudence principle,to identify the earnings management through R&D.With new products R&D's industry particularity,earnings management is closely related with the industry R&D registration process,this paper will firstly put forward a industry indentification standard according to the analysis of pharmaceutical R&D.For the case of Hisun,we will identify the earnings management based on the industry standard and analysis of specific conditions.Finally,we draw two conclusions:(1)Listed companies with poor business performance,poor profitability compared to the previous years,especially faced with the first loss since listing,have an even bigger incentives to manage the earnings through R&D.This kind of earnings management behavior can optimize the profit level of the enterprise to a certain extent.(2)As a way to identify the earnings management of Listed Companies,we can identify the earnings management from the perspective of comparative information disclosure and accounting prudence principle.At the same time,based on the case study,taking the pharmaceutical industry as an case industry,this paper puts forward some suggestions to improve the information quality of the pharmaceutical industry.