Abstract: Tax preference is an important policy means to motivate enterprises to increase their investment in R&D, but their R&D investment is also adversely affected by adjustment costs. On the basis of defining the connotation of adjustment costs, this paper makes the use of the relationship between R&D investment and Tobin’s Q value to estimate the adjustment costs in China’s manufacturing industry, service industry and coal mining industry. Then it employs the system generalized moment estimation method to conduct an empirical analysis of the impact of tax preference and adjustment costs on corporate R&D investment behaviors. The findings show that the existing tax preference policy can play a stimulating role in corporate R&D investment to a certain extent, but the existence of adjustment costs has reduced the incentive effect of tax preference. Therefore, the government should actively create an institutional environment to reduce the adjustment costs of enterprises, encourage the enterprises to make reasonable plans which suit their own industrial characteristics so as to reduce the adjustment costs, and to formulate tax preference policies in accordance with such conditions as industrial planning, enterprise profitability, capital turnover and so on, thus the tax preference policy can be expanded and implemented fundamentally.

Key words: tax preference; adjustment cost; corporate R&D investment; corporate profitability