Do Inquiry Letters Curb Corporate Catering Motives of High Sustainable R&D Investment? Empirical Evidence from China

Yan Yu and Yi-Tsung Lee
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Yan Yu: Business School, Beijing Technology and Business University, Beijing 100048, China

Sustainability, 2022, vol. 14, issue 12, 1-17

Abstract: Sustainable R&D investment is an important issue for enterprises to obtain core competitiveness in modern society. Government supervision can play a guiding role in the process of developing a competitive advantage in innovation in developing countries. This paper analyzes the impact of the government’s proactive regulatory model, represented by the R&D expense inquiry letters (hereafter, RDILs), on the corporate catering motives of high sustainable R&D investment. The results show that the RDILs have a regulatory effect on the listed companies’ catering motives of high sustainable R&D investment, but this effect is weakened by higher stock price crash risk, lower stock liquidity, and greater market short-selling pressure. Further analysis shows that the regulatory effect of RDILs is achieved by reducing the subsequent level of strategic R&D classification manipulation by the company. Overall, our study finds a monitoring role for inquiry letter supervision on the sustainability of corporate R&D investments. Exchanges in other countries should consider their use.

Keywords: R&D expense inquiry letter (RDIL); high sustainable R&D investment; catering motive; market pressure (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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