Local Government Behavior, Financing Constraints and Corporate R&D Investment
- ZHANG Jiawang, PENG Hui & LI Boyang
- Xi'an Jiaotong University, 710061.
This paper constructs a corporate R&D decisionmaking model including government intervention and financing constraints, to examine the impact of local government behavior on firms' R&D activities from the perspective of financing constraints. We found that the bigger the financial constraints, the less the government intervention, and the less the firms' R&D expenditure. On this basis, the empirical test results of the data of listed companies in China for 2008-2014 support the main theoretical conclusions: the financing constraints have significantly inhibited the R&D investment of the listed companies in China while government intervention has significantly enhanced the firms' R&D investment. Financing constraints play a weakening role in the relationship between government intervention and the firms' R&D expenditure. Conversely, in areas with low degree of government intervention or in the subgroup of private firms, financing constraints have a greater inhibitory effect on firms. The sample regression results combining firm size and age show that the financing constraints of SMEs and start-up firms are more prominent, and the government intervention in SMEs and mature firms is deeper. The study findings have inspirations for understanding the financing dilemma of R&D activities in Chinese firms, weakening financial distortion and promoting the fundamental transformation of economic growth mode.
JEL：O32, G28, G32
- Local Government Behavior, Government Intervention, Financing Constraints, R&D Investment