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

Author

Listed:
  • 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)

  • Ammar Ali Gull

    (ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers)

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.

Suggested Citation

  • Chai Bin Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Ammar Ali Gull, 2022. "The impact of financial flexibility and directors’ academic experience on corporate R&D investments: a quantile regression approach," Post-Print hal-03602966, HAL.
    • Handle: RePEc:hal:journl:hal-03602966
    DOI: 10.1080/00036846.2021.1983145
    as

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