| In the development process of enterprises,R&D activities always occupy a very important position,it is not only the source of technological innovation of enterprises,but also one of the ways to form their own competitive advantages,at the same time,the relevant indicators of R&D activities can also fully measure the innovation ability of enterprises.For pharmaceutical manufacturing enterprises,R&D expenditure begins to become a fixed and recurrent expenditure,and the impact of this expenditure on the daily production and operation of the enterprise becomes increasingly significant.In 2006,the Ministry of Finance made extensive amendments to AS 6-Intangible Assets,including Article 7,which changed the accounting treatment of R&D expenditure from expensing to conditional capitalisation,allowing the accounting standards to retain a certain degree of flexibility.The reasons for and consequences of the choice of accounting policy for R&D expenditure by enterprises are still important issues that need to be studied urgently.In order to investigate the reasons for and consequences of the choice of R&D expenditure accounting policies of R&D-driven pharmaceutical enterprises,this paper selects North China Pharmaceutical and East China Pharmaceutical for a double case study to compare and analyse the reasons for and consequences of the choice of R&D expenditure accounting policies of enterprises.This paper adopts the literature research method and the case study method to analyse the different motivation of enterprises to choose R&D expenditure accounting policies,and analyse the differences in their motivation.Finally,the economic consequences of different R&D expenditure accounting policy choices are analysed in terms of market response,R&D intensity and R&D output,and then summarised and recommendations are made.The study found that,with regard to the reasons for choosing the accounting policy for R&D expenditure,when a company has a small profit or is close to a loss,such as Hua Bei Pharmaceutical,it will prefer to capitalise R&D expenditure to ensure a proper profit,to meet the regulatory requirements of the SFC and the Stock Exchange,and to maintain a good capital market image and ensure the basic remuneration benefits of the management.When a company is more profitable,such as Huadong Pharmaceuticals,market pressure,regulatory pressure and management compensation pressure are not too great and there is more room for capitalisation,it will prefer to expense R&D expenditure to meet the need for accounting robustness,reduce the management cost of the company and obtain tax benefits.With regard to the consequences of the choice of accounting policy for R&D expenditure,the capitalisation of R&D expenditure by North China Pharmaceuticals and the surplus announcement by East China Pharmaceuticals both brought positive capital market effects and boosted the share price of the company,while the innovation input and output of the company were significantly enhanced,based on the different motives for the choice of accounting policy for R&D expenditure.Therefore,under different conditions,there is an inherent incentive for companies to choose accounting policies in order to protect the reasonable interests of all parties,and R&D accounting standards or systems that leave a certain degree of flexibility may be conducive to both conveying corporate prospects and value to the market,and to the arrangement of the fundamental economic activity of investing in R&D and innovation,perpetuating the intensity of R&D expenditure and ultimately benefiting the growth of corporate value and shareholder wealth.Therefore,in order for enterprises to make more effective use of the power to choose the accounting policy for R&D expenditure,this paper makes the following suggestions: firstly,enterprises should choose an accounting policy for R&D expenditure that is appropriate to their own development;secondly,accounting standards should leave some flexibility;and thirdly,enterprises should further improve the quality of information disclosure on R&D expenditure. |
