The signal effect of Government R&D Subsidies in China: Does ownership matter?

Aihua Wu

Technological Forecasting and Social Change, 2017, vol. 117, issue C, 339-345

Abstract: R&D subsidies as a policy instrument are used to reduce market failure, apart from its input and output additionality, the notion of behavioural additionality has caused increasingly interest. We focus on the signal/certification effect of behavioural additionality, which means that government grants may serve as a signal for private investors. The signal effect is a certification enhancing a firm's access to external finance. The objective is to examine the impact of different ownership nature to the signal/certification effect. We use data on Chinese listed corporations from 2009 to 2013. The results show that receiving R&D subsidies increases the likelihood that firms will raise external finance, and the state-owned enterprises can receive more subsidies than private enterprises. However, the signal effect of R&D grants is stronger in private enterprises than that in state-owned enterprises of China, indicating that the ownership nature does matter in the R&D subsidies certification effect. This paper enriches current literature of government R&D subsidies by providing empirical evidences in Chinese mixed market.

Keywords: R&D subsidies; Ownership; R&D investment; Signal effect; Certification effect (search for similar items in EconPapers)
JEL-codes: D21 H23 H25 M21 P26 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (70)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:117:y:2017:i:c:p:339-345

DOI: 10.1016/j.techfore.2016.08.033

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