A comprehensive test on the impact of positive performance feedback on corporate R&D investment

Kewen Wang and Yuanbo Qiao

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: Divergent empirical evidence on the impact of positive performance feedback on corporate research and development (R&D) investment obtained by prior studies may be due to the possible model misspecification. In this study, theoretically, we construct an S-shaped impact of positive performance feedback on corporate R&D investment from the lenses of learning by doing and slack search mechanisms of the behavioral theory of the firm, and empirically, find strong evidence for the S shape by including the quadratic and cubic terms in the model based on the data from Chinese listed firms from 2010 to 2020.

Keywords: R&D investment; Positive performance feedback; S shape; Model misspecification; Slack search (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008954

DOI: 10.1016/j.frl.2023.104523

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