Political connection,government R&D subsidies and innovation efficiency: Evidence from China

Lanfang Wang, Yue Wang and Jing Zhou

Finance Research Letters, 2022, vol. 48, issue C

Abstract: This paper explores the impact of political connection on the efficient use of government R&D subsidies to generate innovation outputs. Using a sample of Chinese listed companies from 2008-2017, we find that the association between government R&D subsidies and innovation outputs is significantly smaller for politically connected firms, suggesting that political connection is negatively associated with the efficiency of government R&D subsidies. We further find that the negative impact of political connection on the efficiency of government R&D subsidies is more severe when the political uncertainty is high. Our results are shown to be robust.

Keywords: Political connection; Government R&D subsidies; Innovation efficiency (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322002124

DOI: 10.1016/j.frl.2022.102953

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