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The Metamorphosis of High-tech Enterprises——A study on Manipulation of R&D Based on Tax-reducing Incentives
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TitleThe Metamorphosis of High-tech Enterprises——A study on Manipulation of R&D Based on Tax-reducing Incentives  
AuthorYang Guochao, Liu Jing, Lian Peng and Rui Meng  
OrganizationSchool of Accounting, Zhongnan University of Economics and Law;School of Management, Fudan University;East China University of Political Science and Law; CEIBS;;; 
Key WordsThe Determination of High-Tech Enterprises; The threshold of regulation; R&D manipulation; R&D performance 
Abstract“Administrative Measures for the Determination of High-Tech Enterprises” establishes the quantitative criteria for High-Tech Enterprises, which is directly related to the huge preferential tax. In view of this, this paper studies the relationship between tax reduction policy and corporate R&D manipulation, and the influence of R&D manipulation on R&D performance. We find that in order to obtain preferential tax and government subsidies, the company will manipulate R&D investment to reach the threshold of the determination of the high-tech enterprises. This phenomenon is more pronounced for private firms, profit-making firms and firms located in weak tax enforcement provinces. Furthermore, compared with other firms, the firms with the ratio of R&D investment on sales just meet or beat the threshold of the determination of high-tech enterprises, its R&D investment and the number of patent applications or the number of patents authorized has a weaker positive correlation. The research shows that, depart from the original intention of policy makers, the tax reduction policy of high-tech enterprises will in part stimulate the management to manipulate R&D investment, which leads to the decline of R&D performance. This paper not only enriches the relevant research on threshold management of corporate earnings, but also provides a theoretical reference for the relevant departments to formulate and implement the policy of high-tech enterprises. 
Serial NumberWP1219 
  • Institute of Economics, Chinese Academy of Social Sciences
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