The Impact Of Capitalization Of R&D Expenditure On Financial Performance Of Pharmaceutical Companies Under The Harvard Framework

Scientific and technological innovation is the core driving force of today’s social progress.High-tech enterprises can only improve their competitive advantages only by continuous innovation.As an important part of the high-tech industry,the pharmaceutical industry has the intensity of R&D investment among the top in all industries.Therefore,the accounting policy choice for R&D expenditure is bound to become the focus of attention.In 2006,China promulgated the new "accounting standards for Enterprises".The previous regulation that all R&D expenditure is changed to divide research and development activities into two stages: research and development,stipulate that the capitalization conditions of enterprises can be capitalized.Although the new standards and international accounting standards gradually become consistent,but there are still some loopholes.Due to the new standards did not specify capitalization timing and conditions,largely depends on the enterprise financial personnel judgment and choice,so,when the enterprise in financing needs or operating problems,usually tend to use r & d spending accounting policy for earnings management,has a great influence on the quality of accounting information.Therefore,this paper takes H pharmaceutical enterprises,the leading enterprise in the pharmaceutical industry,as a sample,analyzes the economic consequences caused by the selection of their R&D expenditure accounting policies,explores the motivation of the capitalization selection of enterprise R&D expenditure,and provides reference for policy makers to improve relevant accounting standards and norms.To discuss the choice of R&D expenditure accounting policies of H pharmaceutical enterprises,this paper uses theoretical literature review,typical case analysis and Harvard framework analysis method to conduct an in-depth analysis of the data of typical H pharmaceutical companies in the pharmaceutical industry.Mainly analyzes the data of H pharmaceutical companies in the past six years,and the H pharmaceutical companies2015-2020 R&D spending in accordance with the average capitalization rate of the industry comparable company capitalization simulation,then based on the Harvard framework analyzes financial indicators,from the strategic,accounting,financial and prospect four dimensions analysis H pharmaceutical companies in the comparison before and after capitalization reduction,then restore the data compared with the comparable companies in the same industry,study the impact of capitalization and all cost processing.The research results show that the accounting policy choice has had a significant impact on the corporate financial report.The capitalization of R & D expenditure has a more obvious impact on the cash flow statement and a less adjustment effect on the income statement.In the balance sheet,mainly reflected in the impact on intangible assets.Through financial analysis,it is found that the impact of capitalization treatment is mainly reflected in improving the solvency,profitability,and development ability,while reducing the real income tax rate.In short,for pharmaceutical companies,the choice of accounting policies for R & D expenditure has a significant impact on the financial consequences.When formulating R & D expenditure accounting policies,enterprises need to fully consider the needs of investors and stakeholders and the compliance of accounting policies.This study provides new insights for the pharmaceutical industry in dealing with the accounting issues of R & D expenses,and provides some reference suggestions for regulatory authorities to improve the quality of accounting information in pharmaceutical enterprises.