Cybersecurity policy and corporate R&D investment

Huihui Nong, Yinghao Lin and Quankun Zhang

Finance Research Letters, 2025, vol. 75, issue C

Abstract: This study examines the impact of China's Cybersecurity Law on corporate research and development (R&D) investment. Constructing a difference-in-differences model and using data from A-share listed companies on the Shanghai and Shenzhen stock exchanges between 2007 and 2022, this study demonstrates that Cybersecurity Law implementation significantly promotes corporate R&D investment. Robustness tests included parallel trend tests, propensity score matching, and sample period adjustment, and their results were validated. Heterogeneity analysis reveals that the positive impact is more significant for firms in areas with stronger market development, those with fewer financing constraints, and state-owned enterprises. This study enriches the theoretical understanding of the relationship between cybersecurity policy and corporate R&D and provides valuable insights for policymakers.

Keywords: Cybersecurity law; R&D Investment; Cybersecurity risk; Innovation (search for similar items in EconPapers)
JEL-codes: D80 K24 O30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s154461232500203x

DOI: 10.1016/j.frl.2025.106939

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