The Impact of Government Subsidies on Private R&amp;D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?

Jin, Zhenji; Shang, Yue; Xu, Jian

doi:10.3390/su10072205

Cited by 74 publications

(57 citation statements)

References 59 publications

(80 reference statements)

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“…R&D investment has been found to have a positive impact on firms' performance [16][17][18][19]. Xu and Sim (2018) find the positive relationship between R&D intensity and firm performance in emerging markets.…”

Section: Literature Review and Hypothesesmentioning

confidence: 95%

R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms

Lee

2018

Sustainability

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This study examines the correlation among R&D accounting treatment, R&D state and tax avoidance behavior, with a focus on biotech firms. Findings from the analysis show that most firms are unlikely to capitalize R&D in a steady state; however, in the case of biotech firms, this is not the case. This may be due to biotech firms' accounting choice to capitalize R&D outlays based on a strong belief in future opportunities of commercial success. Moreover, the analysis of tax avoidance behavior finds that firms with low capitalization in an R&D steady state have a positive correlation with tax avoidance, whereas biotech firms do not. The results imply that biotech firms focus on sustainable commercial success unlike the general patterns of other industries.

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Section: Literature Review and Hypothesesmentioning

confidence: 95%

R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms

Lee

2018

Sustainability

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“…They are defined as the amount of R&D subsidies received or R&D tax incentives claimed divided by the amount of net sales. Such measures are also used in other empirical studies (Jin et al, 2018). In order to obtain additional and comprehensive insights regarding how public support for R&D investment impacts firms' R&D expenditures, the following interaction effects are considered in the analysis.…”

Section: Independent Variablesmentioning

confidence: 99%

“…It is generally believed in the literature that human capital is an important determinant of R&D spending (Pingfang and Weimin, 2003). It is therefore expected that company size has a positive impact on firms' R&D spending (Jin et al, 2018). In addition, year dummy variables (YEAR) are included in the empirical analysis to control for time effects.…”

Section: Control Variablesmentioning

confidence: 99%

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

Ravšelj¹,

Aristovnik²

2020

IJEBA

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Purpose: Private R&D investment in the business sector is often subject to market failures, such as positive externalities, information asymmetries, uncertainty and risk, making it often less than socially desirable. This is the primary reason that governments promote private R&D investment. Accordingly, the main aim of this paper is to investigate the impact of public R&D policy on business R&D expenditures. Design/methodology/approach: Applying panel data regression analysis on a sample of 3,113 company-year observations, covering Slovenian companies for the period 2012-2016. Findings: The empirical results show that public support for R&D investment plays an important role in firms' R&D expenditures. As to R&D subsidies, the empirical results reveal they are generally ineffective since they displace firms' R&D expenditures. Yet they do become effective when used in combination with R&D tax incentives and received by companies that are growing. On the contrary, the empirical results also show that R&D tax incentives are always effective when companies have a sufficient tax base. Practical Implications: The overall findings suggest that R&D tax incentives are more effective than R&D subsidies in Slovenia. However, R&D subsidies are still attractive especially for smaller companies without a sufficient tax base. It is hence important to consider both public policy instruments as two parallel ways of supporting firms' R&D expenditures. Originality/value: Utilising a comprehensive dataset covering Slovenian companies made by merging multiple data sources, namely R&D survey, tax, balance-sheet and incomestatement data, representing the main originality and value of the paper.

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“…Though the outcome of R&D is generally uncertain, and its impact is rarely immediate, investment in R&D has been shown to generate future growth opportunities, potentially increasing profits and giving the firm a competitive advantage [30,31]. As competition in a market increases, firms are forced to find new opportunities for growth and push products to market ahead of their competition.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

External Financing, R&D Intensity, and Firm Value in Biotechnology Companies

Lee

2019

Sustainability

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Focusing on biotechnology firms, this study analyzes the relationship between the level of intensity of the research and development (R&D) conducted by a firm, the debt financing decisions the firm makes, and the overall value of the firm. The data presented shows that, although most firms are unlikely to acquire financing from the debt market, the opposite is true for firms in the biotechnology industry. One reason for this divergence may be the belief among biotechnology firms that their future commercial success depends on their ability to develop new products, resulting in a strategy of intense R&D. Furthermore, an examination of firm values reveals that while most firm values are negatively correlated with leverage and R&D intensity, biotechnology firm values show no such correlation, implying that biotechnology firms prioritize sustainable commercial success no matter the source of financing.

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The Impact of Government Subsidies on Private R&D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?

Cited by 74 publications

References 59 publications

R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms

R&D Accounting Treatment, R&D State and Tax Avoidance: With a Focus on Biotech Firms

The Impact of Public R&D Subsidies and Tax Incentives on Business R&D Expenditures

External Financing, R&D Intensity, and Firm Value in Biotechnology Companies

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