R&D Accounting and Innovation Signaling: Insights from Japan’s Pre-Regulation Era
利用日本2000年前企业可自主选择研发支出资本化或费用化的制度，发现资本化与创新质量正相关，费用化与专利数量正相关；2000年强制费用化后，原资本化企业增加专利申请但质量未提升，表明统一费用化掩盖了创新活动的经济差异。
Can the way firms account for R&D shape how they innovate? We exploit Japan's pre-2000 elective R&D accounting regime—allowing firms to choose between expensing and capitalization—and its 2000 transition to mandated expensing to examine how accounting treatment shapes innovation outcomes. Using forward citations and patent applications to measure innovation quality and patenting volume across 967 Japanese firms, we find that under the elective regime, capitalized R&D is positively associated with innovation quality while expensed R&D is positively associated with patenting volume. Following the 2000 mandate, the elimination of the capitalization option leads former capitalizers to intensify patenting as a substitute disclosure mechanism, increasing applications without corresponding improvements in innovation quality. Their patenting behavior converges with always-expensing firms, reflecting an accounting-driven homogenization of innovation disclosure. These findings suggest that uniform expensing obscures economically meaningful differences in innovation activity, with implications for ongoing R&D accounting reforms at FASB and IASB.