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R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms

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  • Namryoung Lee

    (School of Business, Korea Aerospace University, Goyang 10540, Korea)

Abstract

This study examines the correlation among R&D accounting treatment, R&D state and tax avoidance behavior, with a focus on biotech firms. Findings from the analysis show that most firms are unlikely to capitalize R&D in a steady state; however, in the case of biotech firms, this is not the case. This may be due to biotech firms’ accounting choice to capitalize R&D outlays based on a strong belief in future opportunities of commercial success. Moreover, the analysis of tax avoidance behavior finds that firms with low capitalization in an R&D steady state have a positive correlation with tax avoidance, whereas biotech firms do not. The results imply that biotech firms focus on sustainable commercial success unlike the general patterns of other industries.

Suggested Citation

  • Namryoung Lee, 2018. "R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms," Sustainability, MDPI, vol. 11(1), pages 1-12, December.
    • Handle: RePEc:gam:jsusta:v:11:y:2018:i:1:p:44-:d:192318
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    References listed on IDEAS

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    Cited by:

    1. Jaehong Lee & Young Soo Yang, 2019. "International Strategy, R&D Intensity, and Sustainable Earnings of Biotech Firms," Sustainability, MDPI, vol. 11(17), pages 1-17, September.
    2. Guangying Xie & Shengyan Wu & Zhengjiang Song, 2022. "Focus on Innovation or Focus on Sales? The Influences of the Government of China’s Demand-Side Reform during COVID-19 and Their Sustainability Consequences in the Consumer Products Industry," Sustainability, MDPI, vol. 14(20), pages 1-21, October.
    3. Suyon Kim & Jaehong Lee, 2020. "Accounting Treatment of R&D for Environmentally Responsible Firms: Evidence from South Korea," Sustainability, MDPI, vol. 12(8), pages 1-16, April.

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