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Capitalization of R&D expenditure and corporate Value: From the perspective of unexpected earnings management

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  • Kan, Yiwei
  • Li, Mingyang
  • Wu, Haiyan

Abstract

Based on the data of China's A-share listed companies from 2010 to 2023, this paper systematically verifies the relationship between the capitalization rate of R&D expenditures and corporate value. The study finds that: The capitalization of R&D expenditures is significantly positively correlated with corporate value. Capitalized R&D expenditures convey favorable information to the market through signaling theory, indicating high R&D input-output efficiency and strong future growth potential, thereby enhancing corporate value. However, unexpected earnings management significantly suppresses this positive effect. There is a significant heterogeneity in property rights, with the positive impact of R&D expenditure capitalization on corporate value being significantly stronger in private enterprises than in state-owned enterprises. This is because private enterprises rely more on capitalization to transmit innovation signals to alleviate financing constraints.

Suggested Citation

  • Kan, Yiwei & Li, Mingyang & Wu, Haiyan, 2026. "Capitalization of R&D expenditure and corporate Value: From the perspective of unexpected earnings management," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325023293
    DOI: 10.1016/j.frl.2025.109080
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