R&D Capitalization and Reputation-Driven Real Earnings Management (Partially Retracted)
研究发现研发支出资本化会导致管理者因担心资产减值损害声誉而过度投资，高自我监控者更明显，表明强制资本化未必减少真实盈余管理。
ABSTRACT: Prior research finds that mandatory expensing induces underinvestment in research and development (R&D). The current study investigates whether capitalization can also create R&D investment problems. Abandoning a capitalized project requires asset impairment, a negative reporting effect that could damage managers' reputations. In an experiment utilizing M.B.A. student participants, I find that managers responsible for initiating an R&D project are more likely to overinvest when R&D is capitalized. I show that high self-monitors (those most likely to alter their behaviors to convey a positive image) are most likely to overinvest, suggesting that reputation concerns contribute to this behavior. A follow-up survey reveals that, when R&D is capitalized, experienced executives anticipate overinvestment and expect project abandonment to have a stronger negative impact on the responsible manager's reputation and future prospects at their firm. The results suggest that managers are held responsible for the external reporting consequences of their projects, such that mandating R&D capitalization may not reduce real earnings management.