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Tax incentives, market competition, and corporate innovation

Author

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  • Hu, Siyang
  • Zhou, Xingyu
  • Li, Ping

Abstract

Using data from A-share listed firms from 2013 to 2022, this study examines the relationship between tax incentives, market competition, and corporate innovation. Findings reveal that tax incentives significantly encourage corporate innovation. When market rivalry is included as an intermediary variable, tax incentives promote innovation by increasing market competitiveness. Furthermore, the effect of tax incentives on innovation shows significant variety, owing to changes in governance systems and industry features. Finally, based on the research findings, corresponding recommendations are put forward, aiming to provide references for the development of listed companies in China and for government decision-making.

Suggested Citation

  • Hu, Siyang & Zhou, Xingyu & Li, Ping, 2025. "Tax incentives, market competition, and corporate innovation," Finance Research Letters, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325003319
    DOI: 10.1016/j.frl.2025.107067
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    Cited by:

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    4. Xu, Rui & Wu, Lei, 2025. "Digital tax communication and the effectiveness of tax incentives: Evidence from China’s high-tech sector," Finance Research Letters, Elsevier, vol. 84(C).

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