Curse or blessing: National industrial investment fund and corporate R&D in China

Chuanlin Shao, Yunqing Tao, Dong Chen and Yongwei Ye

Finance Research Letters, 2023, vol. 54, issue C

Abstract: Using the establishment of the Chinese Integrated Circuit Industry Investment Fund in 2014 as a quasi-natural experiment, this paper identifies the causal effect of national industrial investment fund on corporate R&D by using the difference-in-differences (DID) method. We find that the establishment of national industrial investment fund has a significant positive effect on corporate R&D, which is more pronounced in firms with more serious financing constraints, poorer internal governance, and laxer external supervision. Furthermore, the mechanism tests show that this policy helps alleviate firms’ financial constraints and agency conflict, thereby increasing corporate R&D. Overall, our findings reveal that the national industrial investment fund has positive effects on corporate R&D, which provides fresh insights into the positive effects of industrial policy.

Keywords: National industrial investment fund; Financial constraints; Agency conflict; Corporate R&D (search for similar items in EconPapers)
JEL-codes: D21 G18 G31 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323000983

DOI: 10.1016/j.frl.2023.103724

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