Does information infrastructure curb corporate R&D manipulation? Evidence from China

Jiacai Xiong, Zelin Yang and Yushu Zhu

Economics Letters, 2024, vol. 235, issue C

Abstract: This paper examines the impact of information infrastructure on corporate R&D manipulation. We exploit the staggered rollout of broadband infrastructure in 117 cities under the Broadband China strategy (BCS) as an exogenous positive shock. On a sample of Chinese listed firms from 2010 to 2019, our difference-in-differences results find a significant reduction in R&D manipulation for firms in BCS-pilot cities following the policy implementation. Cross-sectional tests show that the effect of the BCS on R&D manipulation is more pronounced in non-state-owned enterprises, smaller firms, and firms with low coverages of analysts or media. Mechanism analyses indicate that the decline can be attributed to attenuated information asymmetry and eased financial constraints.

Keywords: Information infrastructure; R&D manipulation; Information asymmetry; Financial constraints; Broadband China strategy (search for similar items in EconPapers)
JEL-codes: G28 G30 H32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:235:y:2024:i:c:s0165176524000466

DOI: 10.1016/j.econlet.2024.111562

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