Business Group Affiliation and R&D Investment: Evidence from China

Zhukun Lou, Siyu Chen, Yingya Jia and Xiaoyu Yu

Emerging Markets Finance and Trade, 2021, vol. 57, issue 8, 2307-2322

Abstract: This study investigates whether business group (BG) affiliation helps member firms overcome market imperfections in accessing capital for research and development (R&D). Using the data of Chinese listed firms, we find that BG affiliation is positively associated with firms’ R&D intensity. Moreover, the positive association between BG affiliation and R&D intensity is more pronounced when firms are affiliated to a larger BG or the firms’ own financial constraints are higher. We document that BG affiliation has stronger impacts on R&D investment in regions with lower-level marketization than in ones with higher marketization. Our findings provide new evidence for institutional void theory in China.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:57:y:2021:i:8:p:2307-2322

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DOI: 10.1080/1540496X.2019.1642195

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