Research On The Effect Of R&D Expense Deduction On Business Performance

Innovation decides the future survival and development of firms,and is a crucial strategy of a nation and a country.One side,firms can promote their own transformation and upgrade by engaging in research,development and innovation.Besides,technological innovation activities help to enhance the hard power of the whole nation.However,research and development activities in the specific implementation process require a large amount of capital and human support and a long time,accompanied by high risk and long return cycle pressure,which will greatly reduce the motivation of enterprise research and innovation.Thus,the government needs to take timely measures to intervene and compensate.Preferential tax policy is one of the main means commonly used by the government to adjust,which can relieve the pressure brought by R&D activities and better encourage enterprises to innovate and develop.The Incentive effect of additional deduction of tax Incentives for research and development costs is particularity prominent,which has attracted the attention of all sectors of society.Based on it,this paper will probe into the effect of this preferential policy on enterprise performance and and test the penetration effect of patent application by firms.At last,analyzing the heterogeneity of the policy based on the actual conditions,which can drive enterprise R&D innovation more pertinently,improve the performance level of firms and encourage enterprises to transform to high quality.The research idea of this paper are as follows,theoretical aspects: the definition of R&D expense deduction policy,firm performance and enterprise R&D output is clarified.l Subsequently,literature reviews is conducted from the effect of tax Incentives on corporate performance.Then,the mechanism of action and the hypothesis of this paper are proposed based on some related theories.Next,starting from the policy itself,this paper divides into three stages,summarizes its evolution characteristics and further explore the policy can continue to improve the part.Eventually,it is the implementation of the policy of extra deduction for research and development expenses and the simple elaboration of our enterprise performance.Empirical aspects: OLS model is constructed with the public date of Shanghai and Shenzhen A-Share enterprises from 2007 to 2021.Incen is selected as the independent variable and ROE is set as the dependent variable to explore the effect which additional deduction policy influences the performance of domestic firms.On this basis,innovation output is added as the intermediary variable.To seek the best means to elevate the firms’ performance,the enterprise life and the degree of product market competition are elected for heterogeneity analysis based on the differences of company characteristics and macro environment.Research shows that the R&D additional deduction expense policy Incentives firm performance prominently,that is,the additional deduction has a certain Incentive effect on enterprise performance.The government’s reasonable setting of preferential policies for additional deductions can help enterprises improve their performance.In addition,firms can indirectly improve their performance by increasing innovation output,which is part of the intermediate variable.Combined with heterogeneity analysis: it has a significant Incentive effect on the performance of the growing enterprises;it significantly promotes the mature enterprises,but it is not remarkable.It will weaken the performance of companies in the recession period.In addition,the research and development expense deduction policy has a more Incentive effect on enterprises with a high degree of product market competition.In the end,this paper comes up with some proposals from the policy’s and the firm’s views.From the government’s point of view:(1)keep up to modify and develop the additional deduction policy;(2)formulate "preferential" policies according to the nature and environment of the enterprise itself;(3)strengthen supervision to ensure the imp policy implementation;(4)strengthen the property rights protection mechanism and set up the better protection of property rights.At the enterprise level,in order to enjoy this preferential policy better,the key is to improve the firm’s own financial accounting ability and realize the construction of inter-department information sharing mechanism.