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How revisions in sector-specific laws affect business R&D performance

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  • Huang, Shangyuan
  • Chen, Xuejiao

Abstract

The 2018 revision of China’s Electricity Law, which has reshaped market transaction rules and enhanced the efficiency of resource allocation mechanisms, is a critical institutional driver of power enterprises’ innovative transformation. In this paper, a sample of 144 A-share listed power enterprises in China from 2013 to 2023 are subjected to a difference-in-differences analysis to empirically examine the net effect of the 2018 Electricity Law revision on the enterprises’ innovation efficiency and the underlying mechanisms. The revision is found to significantly enhance the research and development (R&D) efficiency of power enterprises. Moderating effect analysis shows that the revision more strongly promotes the innovation transformation of enterprises with higher total factor productivity. Heterogeneity tests reveal that power enterprises with lower risk-taking levels and smaller financing constraints experience more significant improvements in R&D efficiency following the revision of the Electricity Law than their counterparts with higher risk-taking levels and greater financing constraints.

Suggested Citation

  • Huang, Shangyuan & Chen, Xuejiao, 2026. "How revisions in sector-specific laws affect business R&D performance," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612325027102
    DOI: 10.1016/j.frl.2025.109461
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