Does financial information presentation format matter? Evidence from Chinese firms' reporting of research and development expense

• 成果类型: Article
• 署名作者: Mohanram, Partha; Sun, Wei; Xin, Baohua; Zhu, Jigao
• 署名单位: University of Toronto; China Agricultural University; University of International Business & Economics
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-024-09868-y
• 发表日期: 2025
• 页码: 1638-1682
• 关键词: stock-market valuation; earnings management; VALUE-RELEVANCE; statement presentation; disclosure; RECOGNITION; income; performance; investors; real

摘要

This paper investigates the effects of a regulatory change in China of the presentation format for research and development (R&D) expense, which mandates public firms to explicitly present R&D expense on their income statements. We predict that this regulation will impact nonstate-owned enterprises (non-SOEs), which care about stock market valuation, more than state-owned enterprises (SOEs). We find that non-SOEs report significantly higher R&D expense post regulation. Furthermore, the R&D increase strengthens for firms facing higher peer pressure to pursue R&D and high-tech firms and weakens for firms with higher institutional investment. The positive valuation implication of R&D diminishes post regulation, suggesting that investors discount the increase in R&D expense. An additional analysis shows that firms' innovation efficiency decreases post regulation.