Research On Earnings Management Of Walvax' R&D Expenditure Capitalization

The continuous improvement and innovation of science and technology is the main pillar of the country to further enhance social productivity and comprehensive national strength.China emphasizes the innovation capacity of each part,pay attention to the development of science and technology,implement innovation to promote development strategy.At this stage,China's major research and development through scientific and technological achievements,and allow it to mass production to bring capital benefits,in order to stimulate the economic transformation and upgrading and sustainable development.In order to promote research and development,China issued a new accounting standards in 2006,the provisions of R & D expenditure for conditional capitalization of the accounting treatment,but its research and development stage of the boundaries are not clear,the subjective nature of capitalization conditions is strong and there is no mandatory requirement for disclosure,with the R & D investment continues to increase,enterprises in practice will usually use these issues to implement earnings management.In order to reduce the behavior of earnings management to make the market better development,research on R & D expenditure capitalization earnings management becomes more and more important.This paper defines earnings management as a neutral earnings management,selects Walvax in the biomedical manufacturing industry as the research object,and uses the econometric model method and the empirical identification method to analyze the earnings management of R & D expenditure capitalization.First of all,it summarizes the research on R& D expenditure and earnings management in the existing literature.Secondly,it introduces the relevant theories of R & D expenditure and earnings management,and finds out the problems that should be paid attention to in the process by analyzing the accounting treatment of R & D expenditure,summarizes the means of earnings management,motivations and identification methods.On this basis,the relationship between capitalized R & D expenditure and earnings management is analyzed.And then combined with Walvax biological case,from the total R & D investment,R & D expenditure capitalization rate analysis of its abnormal situation.Using earnings management identification methods such as measurement model and experience identification,measure the degree of earnings management.Analyzing whether it uses capitalization of R & D expenditure to implement earnings management from contractual motivations,smoothing profit motivations and capital markets motivations.Finally,on the basis of the case to ask questions and targeted recommendations.The results of the research show that the enterprises may use capitalization of R & D spending for earnings management.However,because this article is a case study,in someways have some limitations.To a certain extent,this study only show that the company's R &D expenditures exist earnings management behavior,in the proposed issues and suggestions may be limitations.In the future,we can start from the actual operation of enterprise R & D expenditure,with a variety of different ways to identify earnings management,but also by comparing the data of different industries to analyze the capital expenditure of R & D expenditure management.This will make the securities market more standardized.