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Franchises, financial asset allocation, and corporate R&D investment

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  • Li, Qing
  • Wan, Ruijia

Abstract

This study examines the impact of franchise ownership and financial asset allocation on research and development (R&D) investment among Chinese listed companies from 2011 to 2022. Key findings indicate that franchises positively encourage enterprises to increase R&D investment by providing stable cash flows and strategic advantages, such as enhanced market share and sustained revenue. In contrast, financial asset allocation appears to inhibit R&D investment by potentially crowding out operational capital and reducing internal resource allocation efficiency. Additionally, franchises significantly impact R&D investment in non-state-owned enterprises (NSOEs) more than in state-owned ones, suggesting that NSOEs experience more significant constraints due to their financial prioritization of short-term returns and liquidity. This research highlights the complex dynamics between corporate strategic assets and investment behaviors, offering insights into optimizing financial asset allocation to support sustained corporate innovation and growth.

Suggested Citation

  • Li, Qing & Wan, Ruijia, 2024. "Franchises, financial asset allocation, and corporate R&D investment," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006068
    DOI: 10.1016/j.frl.2024.105576
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