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

Namryoung Lee
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Namryoung Lee: School of Business, Korea Aerospace University, Goyang 10540, Korea

Sustainability, 2018, vol. 11, issue 1, 1-12

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.

Keywords: R&D accounting treatment; R&D stage; tax avoidance; biotech sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2018:i:1:p:44-:d:192318

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