The Empirical Evidence of Market Evaluation of R&D Expense Recongnition in Taiwan.

• Main Authors: Yang, Mei-Jin, 楊美津
• Other Authors: Kok-Kun Choi
• Format: Others
• Language: zh-TW
• Published: 1996
• Online Access: http://ndltd.ncl.edu.tw/handle/14991056697593578402

碩士 === 淡江大學 === 會計學系 === 84 === The recent trend of increasing investment in R&D activities in both the publicand private sector suggests an increasing pressure of competition in the economic environment. According, the accounting treatment of R&Dexpenditure, asdictated by SFAS No.2 deserves special attention. It requires thatall R&D expenditures be expensed wheb incurred in order to maintainuniformity of accounting treatment and to enhance comparability among firms.However, such treatment has been criticized for ignoring the real economics ofR&D activity--the probability of future cash flow has been increased,whhich isthe same as all other assets in hte financial statement. This study untends to assess the value of corporate R&D expenditure from the investors perspective by using a market valuation model. The purpose is toidentify empirical evidence of R&D expenditure as an important constituent of a firm's value. Since the balance sheet statement carries assets of economic value,and is the primary basis to evaluate a firm's value, R&D expenditure should becapitalized in the balance sheet, if empirical finding shows rhat it is a determinant of a firm's value. The empriical result is consisten with this expectation. A further analysis shows that the economic amortization rate of R&D benefits in Taiwan ranges from 1%to11%in general. The Above finding implies that the accountin regulatory authority should consider if the value ofbalance sheet statement has been unduly distored by dictating an immediaterecognition of all R&D expenditure, let alone the economic costs of restating allpast R&D expenitures that have been expensed, when the investing publicevaluate their corporate investements.