The impact of financial flexibility and directors’ academic experience on corporate R&D investments: a quantile regression approach

Chai Bin Feng, Sultan Sikandar Mirza, Tanveer Ahsan and Ammar Gull ()
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Chai Bin Feng: ZJSU - Zhejiang Gongshang University [Hangzhou]
Sultan Sikandar Mirza: Waikato Management School - Waikato University
Tanveer Ahsan: ESC [Rennes] - ESC Rennes School of Business

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Abstract: This study investigates the impact of financial flexibility and academic experience of a firm's board on corporate R&D investments in China. It also explores the moderating role of directors' academic experience on the relationship between financial flexibility and R&D investments. We apply ordinary least square, fixed effects and quantile regression analysis using panel data of 2,195 A-share firms listed on Shanghai and Shenzhen stock exchanges during the period from 2011 to 2018. We find that both financial flexibility and directors' academic experience promote R&D investments of Chinese non-financial firms. We also observe that directors' academic experience weakens the positive impact of financial flexibility on R&D investments for firms operating in underdeveloped financial regions, whereas it strengthens the positive impact of financial flexibility on R&D investments for firms operating in developed financial regions. Our quantile regression results suggest that academic experience has a highly significant positive moderating impact on the financial flexibility of lower R&D investment firms relative to high R&D investment firms. These results are robust to alternate proxy of financial flexibility and endogeneity issues due to reverse causality.

Keywords: Directors’ academic experience; financial flexibility; R&D investments; panel data; China (search for similar items in EconPapers)
Date: 2022-04-09
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Published in Applied Economics, 2022, 54 (17), pp.1974-1988. ⟨10.1080/00036846.2021.1983145⟩

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Journal Article: The impact of financial flexibility and directors’ academic experience on corporate R&D investments: a quantile regression approach (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03602966

DOI: 10.1080/00036846.2021.1983145

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