Abstract: Based on the data of 601 manufacturing companies listed on the A-shares market and using correlation analysis and regressionanalysis, this paper examines the value relevance of advertising expenditure and R&D expenditure and the complementarity of these two kinds of expenditures. Also, the accounting treatment of these two kinds of expenditures is discussed in this paper. Results show that in high-technology industry, capitalized R&D is positively and significantly associated with corporate value and the expensed R&D has no significant relevance with corporate value. Whether it is in high or low technology industry, advertising expenditure has a positive and significant relation with Tobin's Q. These findings suggest that capitalizing R&D expenditures policy should be only applied to high-technology industry, and the advertising expenditure should be capitalized in all industry. The paper also finds that advertising and R&D are complements in high-technology industry and market pull is more important than technology pushin the value creation of Chinese manufacturing listed companies. These results provide beneficial reference for enterprise investment decision; also they have important referencevalue for accounting standards establishing department.

Key words: advertising expenditure, R&D expenditure, capitalized R&D, expensed R&D, value relevance, complementarity