The incentive effects of R&D tax credits: evidence from Chinese listed manufacturing firms

Abstract

This study examines whether R&D tax incentives in China have a positive effect on R&D investment, R&D expenditure and firm value. Using a sample of manufacturing firms listed on the Shanghai and Shenzhen stock exchanges over the period 2012-2016, we find that the R&D tax credit for research and development not only has an incentive effect on enterprise R&D investment and R&D expenditure but also has an incentive effect on firm value. This study provides important implications for stakeholders, such as investors, policy makers, and policy makers who pursue long-term performance objectives in developing countries or regions.