Capitalisation of research and development investment and enterprise value: a study on the threshold effect based on level of financialisation

Xuewei Wang, Maosheng Ran and Xiaoge Tong

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 2, 2142827

Abstract: This study uses a mathematical model to explore how enterprises’ financialisation levels affect the role of research and development (R&D) investment capitalisation in enterprise value. We construct a mathematical model involving the financialisation level, capitalised R&D investment, and enterprise value. The sample comprises A-share listed companies that disclosed the capitalisation of R&D investment in the Shanghai and Shenzhen stock markets from 2014 to 2020. The results suggest that R&D investment capitalisation positively impacts enterprise value, especially in the current phase. With financialisation level as the threshold variable, R&D investment capitalisation has a double threshold effect on enterprise value in the current and next phases. Additionally, corporate financial investment behaviour has a timely impact on capitalised R&D investment but does not significantly impact enterprise value in a future phase. Enterprises evidently choose financial investment to enhance enterprise value by increasing capitalised R&D investment. These results can help enterprises formulate financial asset investment strategies and promote their development from virtual to real. The government should standardise enterprises’ financial investment behaviour, prevent excessive financialisation, and promote high-quality development of the real economy.

Date: 2023
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DOI: 10.1080/1331677X.2022.2142827

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