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R&D-based earnings management, accounting performance and market return: Evidence from national-recognized enterprise technology centers in China

Xindong Zhang (Shanxi University, Taiyuan, China)
Yanan He (Shanxi University, Taiyuan, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 18 November 2013

992

Abstract

Purpose

The purpose of this paper is to provide a theoretical support for managers and investors and help them to identify corporate investment decisions on research and development (R&D) rationally.

Design/methodology/approach

Grouping and regression analysis are employed in the research.

Findings

The paper finds that managers in firms with medium accounting performance and at the border of profit target are prone to manage earnings by real R&D transactions, namely reducing R&D expenditures.

Originality/value

The conclusions are of great significance for innovation promotion in China.

Keywords

Acknowledgements

This paper is supported by Shanxi Province Foundation for Returnees (2012-023), the Program for New Century Excellent Talents in University (NCET-09-0869), National Natural Science Foundation of China (71371113), and Ministry of Education in China (MOE) Project of Humanities and Social Sciences (13YJA790154). The authors thank the anonymous reviewers whose suggestions were useful in putting the paper in its present form. The authors are grateful for the comments and suggestions from delegates of the 2011 British Accounting and Finance Association (BAFA) Conference and 2012 International Finance and Banking Society (IFABS) Conference, which significantly improved this paper. The special gratitude goes to the authors' English-teaching friend, Linxiu Yang from Shanxi University and Weimin Liu from Nottingham Business School, for their careful proofreading of the paper. However, the authors are responsible for any errors that remain in the paper.

Citation

Zhang, X. and He, Y. (2013), "R&D-based earnings management, accounting performance and market return: Evidence from national-recognized enterprise technology centers in China", Chinese Management Studies, Vol. 7 No. 4, pp. 572-585. https://doi.org/10.1108/CMS-09-2013-0176

Publisher

:

Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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