How do top management team characteristics affect government R&D subsidy grants? Evidence from an information economics perspective

Maoyan She, Die Hu (), Yuandi Wang and Li Li
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Maoyan She: Chengdu University of Technology
Die Hu: Fuzhou University, University Town
Yuandi Wang: Business School of Sichuan University, Sichuan University
Li Li: China Three Gorges Construction Engineering Corporation, Haidian District

Asian Business & Management, 2023, vol. 22, issue 1, No 13, 330-353

Abstract: Abstract Drawing from signaling theory in information economics, this study investigates the mechanism of the government research and development (R&D) subsidies grants by emphasizing the role of the top management team (TMT) characteristics in the context of China. Specifically, we argue that TMT characteristics can serve as valid signals by conveying legitimacy to reduce information asymmetry between firms and governments, which subsequently affect governments’ decisions to grant R&D subsidies. We test the hypotheses using data from Chinese listed firms between 2008 and 2019. The findings indicate that age, tenure, diversity in functional backgrounds, or team size of enterprises’ top managers are positively associated with the amount of government R&D subsidies granted. This positive effect is more pronounced in regions with a lower marketization level. This study contributes to the existing literature on R&D subsidies, and offers insights to both policymakers and firm managers.

Keywords: Government R&D subsidies; TMT characteristics; Information asymmetry; Signaling theory; China (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41291-021-00168-w

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