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Do Inquiry Letters Curb Corporate Catering Motives of High Sustainable R&D Investment? Empirical Evidence from China

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  • Yan Yu

    (Business School, Beijing Technology and Business University, Beijing 100048, China)

  • Yi-Tsung Lee

    (Guanghua School of Management, Peking University, Beijing 100093, China)

Abstract

Sustainable R&D investment is an important issue for enterprises to obtain core competitiveness in modern society. Government supervision can play a guiding role in the process of developing a competitive advantage in innovation in developing countries. This paper analyzes the impact of the government’s proactive regulatory model, represented by the R&D expense inquiry letters (hereafter, RDILs), on the corporate catering motives of high sustainable R&D investment. The results show that the RDILs have a regulatory effect on the listed companies’ catering motives of high sustainable R&D investment, but this effect is weakened by higher stock price crash risk, lower stock liquidity, and greater market short-selling pressure. Further analysis shows that the regulatory effect of RDILs is achieved by reducing the subsequent level of strategic R&D classification manipulation by the company. Overall, our study finds a monitoring role for inquiry letter supervision on the sustainability of corporate R&D investments. Exchanges in other countries should consider their use.

Suggested Citation

  • Yan Yu & Yi-Tsung Lee, 2022. "Do Inquiry Letters Curb Corporate Catering Motives of High Sustainable R&D Investment? Empirical Evidence from China," Sustainability, MDPI, vol. 14(12), pages 1-17, June.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:12:p:7476-:d:842452
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    Cited by:

    1. Yan Yu, 2022. "Analyst Earnings Forecast Optimism during the COVID-19 Pandemic: Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-16, October.

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