Research On Government Subsidies,R&D Capitalization And Earnings Management Of AI Enterprises

At present,the AI enterprises in China are still in the growth stage,often facing the risk of low profits and even delisting.For industries in the early stage of industrialization,the government is the main source of R&D funds.On the one hand,the government has provided huge project funds to support enterprises' R&D and encourage enterprises to invest in R&D.On the other hand,the government has been constantly "transfusing blood" to these AI enterprises for the sake of protecting local industries and stabilizing social employment.What role does government subsidy play in AI enterprises? Does it encourage R&D investment and create innovative results,or does it provide an opportunity for enterprises to turn losses into profits?By reading the literature on earnings management,this paper first sorted out the literature on motivation,measurement methods and ways of earnings management,and then sorted out the relationship between government subsidies,R&D capitalization and earnings management.At the same time,three theoretical foundations of this paper are introduced.They are externality,R&D capitalization accounting standards and expansion of Jones model.Then in the third chapter,the current situation of AI industry is analyzed.The amount of government subsidies in the subdivision of AI industry listed on A-share market in China is counted,and the current situation of R&D investment and profitability in AI industry is analyzed.In the fourth part of the case analysis,I selected the A-share AI leading enterprise-IFLYTEK CO.,LTD as my case analysis object.Firstly,it gives a more comprehensive introduction to the University of Science and Technology in terms of its historical evolution,ownership structure,strategy and income analysis.Then it collects and collates the financial data of IFLYTEK CO.,LTD from 2008 to 2017,and makes a more detailed analysis,including R&D investment and government subsidies.Then,it summarizes the motivation of earnings management,and judges the suspicion of earnings management based on the results of Jones model.From the perspectives of deferred earnings and R&D capitalization,this paper concretely analyses the path of earnings management,and also makes an analysis of the financial impact of the earnings management of IFLYTEK CO.,LTD.It is found that IFLYTEK CO.,LTD carries out earnings management mainly by transferring deferred earnings items to control R&D capitalization rate.This means of deferred recognition of cost capitalization can only beautify financial data in the short term,and the intangible assets in the later period increase continuously,while the profits of enterprises stagnate,the harm of this adjustment mode will appear.Finally,the case is summarized and four suggestions are put forward as follows: the government should adjust the subsidy policy for AI industry;further improve the accounting standards related to R&D expenses;increase the intensity of audit and punishment to restrain excessive earnings management;and AI enterprises should strengthen R&D innovation.The main contribution of this paper is reflected in the following three aspects: the relationship between R&D capitalization and earnings management,and the impact of R&D capitalization on the earnings of high-tech enterprises such as AI.Moreover,because the disclosure of R&D investment in accounting standards is not comprehensive,the use of R&D capitalization for earnings management by AI enterprises is concealed and subjective,which provides a new way of thinking for the study of earnings management.This paper supplements the literature and data of government subsidies for AI industry.This paper not only collates the industrial chain and development status of AI industry,but also supplements the relevant data of AI industry.From the perspective of government subsidy,this paper selected representative enterprises for research,hoping to offer some ideas for future research.The government subsidy policy of AI industry is rethought.Enterprises should strengthen their R&D autonomy,and government subsidies are only a means of guidance.It is suggested that the future government subsidies should be targeted,the subsidies should be put into core technology,and the audit of enterprise R&D projects should be strengthened.With the withdrawal of government subsidies,the phenomenon of earnings management by enterprises through government subsidies is also reduced.