Title :
A research on motivations of R&D expenditures capitalization: Evidence from Chinese high-tech enterprises
Author :
Ming Chen ; Xiao-hui Shi
Author_Institution :
Sch. of Econ. & Manage., Dalian Jiaotong Univ., Dalian, China
Abstract :
Along with the continuous growth of R&D expenditures in many enterprises, the accounting treatment of R&D expenditures is becoming more and more important. China´s new accounting standards issued in 2006 apply conditional capitalization to the accounting treatment of R&D expenditures, which largely depends on accountants´ subjective judgment, and provides spacious space for earnings management. As earnings management produces lots of adverse economic consequences, the main motives need to be discussed. This paper takes listed companies of high-tech as samples to study their financial reports from 2008 to 2011, and finds that the main motives of R&D expenditures capitalization are smooth earnings, debt and compensation contracts, and political cost, but the capital market could not provide a sound explanation. Finally, based on empirical results, some corresponding countermeasures are put forward.
Keywords :
accounting; company reports; investment; research and development; Chinese high-tech enterprises; R and D expenditures capitalization; accounting standards; accounting treatment; capital market; compensation contracts; debt; earnings management; financial reports; political cost; research and development; Companies; Contracts; Economics; Educational institutions; Investment; Standards; Technological innovation; High-tech enterprises; R&D expenditures; capitalization; motivation;
Conference_Titel :
Information Management, Innovation Management and Industrial Engineering (ICIII), 2013 6th International Conference on
Conference_Location :
Xi´an
Print_ISBN :
978-1-4799-3985-5
DOI :
10.1109/ICIII.2013.6703625