ScholarWorks@숙명여자대학교

초록

In recent years, corporate Research and Development activities (R&D activities) have become more critical. Nevertheless, empirical research on R&D expenditures and the role of supervisory agency (Financial Supervisory Service, FSS) is very rare. Therefore, this study focuses companies listed on KOSPI and KOSDAQ from 2007 to 2017 and examines various issues related to R&D expenditures. First, this study examines the factors affecting the capitalization of R&D expenditures. Second, this study investigates the factors affecting the recognition of impairment loss on development cost which is classified in intangible assets. A manager who wants to avoid a deficit can increase the capitalization rate of R&D expenditures, thereby increasing assets and net income. However, this study documents that the capitalization ratio of R&D expenditures is smaller when large audit firms conduct the audit. Besides, the capitalization ratio decreased significantly in the FSS designated supervision year, suggesting that strengthening supervision of the FSS could control some opportunistic earnings management using R&D expenditures. Next, this study finds that when the audit is performed by a large audit firm or when the audit firm is replaced, a greater magnitude of impairment loss on development costs is recognized. Also, in the year subject to theme monitoring by FSS, the frequency and magnitude of impairment loss recognition increase on average. The results of this study emphasize the importance of the role of auditors and FSS to enhance the usefulness of accounting information.

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