Do R&D tax incentives work? Firm-level evidence from China |
| |
Affiliation: | 1. School of Business, Central South University, Changsha Hunan 410083,China;2. School of Economics and Management, China University of Geosciences, Wuhan Hubei 430074, China;3. Institute of Industrial Economics, Chinese Academy of Social Sciences, Beijing 100836,China |
| |
Abstract: | Tax incentives have been used worldwide to encourage firm R&D, but there is little evidence on their effectiveness as a policy tool in developing countries. We use a panel dataset of Chinese listed companies covering 2007 to 2013 to assess the effects of tax incentives on firm R&D expenditures and analyze how institutional conditions shape these effects. Our results show that tax incentives motivate R&D expenditures for our sample firms. A 10% reduction in R&D user costs leads firms to increase R&D expenditures by 3.97% in the short run. We also find considerable effect heterogeneity: Tax incentives significantly stimulate R&D in private firms but have little influence on state-owned enterprises' R&D expenditures. Moreover, the effects of tax incentives are more pronounced for private firms without political connections. Hence, reducing political intervention complements tax incentives' capacity to foster firm R&D in developing countries. |
| |
Keywords: | |
本文献已被 ScienceDirect 等数据库收录! |
|