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China adopted its new Accounting Standards for Business Enterprises No. 6 in 2007, which substantially converges with the International Financial Reporting Standards. It stipulates that firms operating in China shall capitalize development costs provided specific criteria have been met. This paper aims to examine the effects of the new accounting policies of R&D on the value-relevance and stock performance of 36,299 Chinese firms-years from 2007 to 2020.

A comprehensive multi-stage analysis was conducted. Multiple linear regressions were performed on the pooled cross-sectional time-series total R&D, capitalized expenditures, expensed costs and other key financial factors to test for the effects of R&D on the stock prices, contemporaneous stock returns and subsequent stock returns for the full sample, capitalizer sample and expenser sample, respectively.

First, majority of Chinese firms (about 80% of those reported) elect to adopt expensing R&D approach, while about 20% deploys capitalization treatment. Second, key attributes such as size, profitability, leverage and R&D intensity are highly associated with capitalization propensity. Third, current capitalization affects the contemporaneous stock prices and stock returns (priced-in) with yearly volatility. Finally, intertemporal association exists between firms’ expensing costs and subsequent returns due to a delayed reaction.

As the world largest emerging economy, the results show that research and development information adds value, and capitalizers outperforms expensers in the area of stock performance. This strategy works irrespectively of economic development stage or capital market maturity. The findings call for more capitalization.

Lean Six Sigma 4.0 has brought about a paradigm shift in customization, automation, value creation and digitalization to achieve excellence in human factors, operations and sustainable development. Despite its potential, LSS 4.0 is still in its nascent stage, with researchers striving to identify the key and relevant components of LSS in relation to Industry 4.0. The present study aims to address this knowledge gap through a literature review and subsequently provide a conceptual framework for LSS within the context of digital transformation.

In this study, the authors have conducted a thorough review of reputable articles published between 2011 and 2022, focusing on the integration of Lean Six Sigma (LSS) and Industry 4.0 (I4.0). By using appropriate keywords, the authors identified around 85 relevant articles. The main objective of this integrative literature review was to analyze and extract valuable knowledge from the existing literature on LSS and I4.0. Based on the authors’ findings, a conceptual framework was developed.

The review revealed the motivators, building blocks, tools and challenges of LSS 4.0. The conceptual framework delves into the key aspects of LSS 4.0, focusing on the dimensions of people, process and technology, as well as their subdimensions. These subdimensions serve as the building blocks for developing LSS 4.0 capabilities. The proposed framework visually represents the conceptualization and the relationships among its components.

Only a few conceptual approaches to LSS are developed that include the concepts, new roles and elements of I4.0. As a result, this research investigates the gap in current LSS models preceding I4.0 and develops a conceptual framework to provide a novel and comprehensive summary of the new concepts and components driving nascent and current LSS practices in the digital era.

This study offers practical guidance for implementing LSS in the context of I4.0, emphasizing digital transformation. The findings highlight motivators, building blocks, tools, challenges and spread of LSS 4.0 practices, and present a conceptual framework of LSS 4.0. These insights can help organizations enhance their LSS capabilities and achieve excellence in human factors, operations and sustainable development.

This study aims to make a significant contribution to the model-building efforts of researchers focusing on LSS 4.0. By offering practical guidance, the points discussed in this study help enhance the implementation efforts of practitioners and organizations in the context of I4.0, with a specific focus on digital transformation. The guidance provided takes into account the perspectives of people, processes and technology, providing valuable insights for successful integration.