Tong Fu
How state ownership affects corporate R&D: An inverted‐U‐shaped relationship
Fu, Tong; Jian, Ze; Li, Youwei
Abstract
The existing literature provides mixed evidence about the effect of state ownership on corporate research and development (R&D). As this article hypothesizes, state ownership has a positive institutional effect on the investment environment for R&D and a negative institutional effect on firm operations for innovation. With evidence from China, we confirm that state-owned shares have an inverted-U-shaped causal effect on corporate R&D and that having the state as a minority shareholder is optimal for corporate R&D. We further document that, when a firm's R&D investment at least equals reinvestment of its profit, the threshold for state-owned shares is larger than it would be otherwise. Therefore, we justify the contradictory institutional effects of state ownership with an inverted-U-shaped relationship, thereby enhancing understanding of institutions and state ownership for corporate finance.
Citation
Fu, T., Jian, Z., & Li, Y. (in press). How state ownership affects corporate R&D: An inverted‐U‐shaped relationship. International journal of finance & economics : IJFE, https://doi.org/10.1002/ijfe.2589
Journal Article Type | Article |
---|---|
Acceptance Date | Nov 29, 2021 |
Online Publication Date | Dec 30, 2021 |
Deposit Date | Jan 1, 2022 |
Publicly Available Date | Dec 31, 2023 |
Journal | International Journal of Finance and Economics |
Print ISSN | 1076-9307 |
Electronic ISSN | 1099-1158 |
Publisher | Wiley |
Peer Reviewed | Peer Reviewed |
DOI | https://doi.org/10.1002/ijfe.2589 |
Keywords | Access to resources; China; Corporate R&D; Inverted-U-shaped relationship; State ownership; Resource utilization |
Public URL | https://hull-repository.worktribe.com/output/3904782 |
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©2021 University of Hull
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