Asymmetric adjustment of R&D expenditure in Chinese listed companies

WANG Fangjun, SUN Junqin, WANG Xuanzi

Systems Engineering - Theory & Practice ›› 2018, Vol. 38 ›› Issue (12) : 3050-3058.

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Systems Engineering - Theory & Practice ›› 2018, Vol. 38 ›› Issue (12) : 3050-3058. DOI: 10.12011/1000-6788(2018)12-3050-09

Asymmetric adjustment of R&D expenditure in Chinese listed companies

  • WANG Fangjun1,2, SUN Junqin1, WANG Xuanzi1
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Abstract

This article establishes the correlation model of R&D expenditure and operating revenue by using the sample of Chinese listed companies between 2011 and 2016. We find that the relationship between R&D adjustment and revenue is asymmetric, that is, R&D expenditure increases more when revenue rises than R&D expenditure decreases when revenue falls by an equivalent amount. The outcome shows that R&D expenditure increases on an average of 0.634% per 1% increase in revenue but decreases only 0.401% per 1% decrease in revenue. Furthermore, this paper examines that R&D expenditure stickiness is less pronounced when revenue declines in the preceding period, but rises when macroeconomic grows and the degree of employee intensity increases. In addition, the stickiness of R&D expenditure is higher in state-owned enterprises compared with private-owned enterprises. Research on R&D expenditure stickiness can help uncover the "black box" of managers' adjustment in R&D expenditures.

Key words

R&D expenditure / operating revenue / asymmetric adjustment / stickiness

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WANG Fangjun , SUN Junqin , WANG Xuanzi. Asymmetric adjustment of R&D expenditure in Chinese listed companies. Systems Engineering - Theory & Practice, 2018, 38(12): 3050-3058 https://doi.org/10.12011/1000-6788(2018)12-3050-09

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Funding

National Natural Science Foundation of China (71472148); Fundamental Research Funds for the Central Universities (sk2018047)
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