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How creditor protection stimulates corporate R&D: Insights from internet judicial auctions in China

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  • Tao, Yunqing
  • Wang, Qiaochu
  • Yang, Jinqiang
  • Ye, Yongwei

Abstract

This paper investigates whether strengthened creditor protection affects corporate R&D. Our identification strategy treats China's Internet judicial auction (IJA) as an exogenous shock to creditor protection and then adopts a staggered difference-in-differences (DID) estimation. The results show that IJA significantly increase corporate R&D. Mechanism analysis indicates that IJA increase loan availability of firms by lowering loan costs and improving loan scale, finally leading to an enhancement in R&D investment. In addition, this promotion effect is more pronounced among non-state-owned firms, firms in capital-intensive industries, and firms in highly competitive industries. Further analysis suggests that IJA can improve firms' patent output, productivity, and operational efficiency. Overall, our findings show that strengthening creditor protection through IJA can enhance corporate R&D investment.

Suggested Citation

  • Tao, Yunqing & Wang, Qiaochu & Yang, Jinqiang & Ye, Yongwei, 2025. "How creditor protection stimulates corporate R&D: Insights from internet judicial auctions in China," Pacific-Basin Finance Journal, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:pacfin:v:89:y:2025:i:c:s0927538x24003445
    DOI: 10.1016/j.pacfin.2024.102592
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    References listed on IDEAS

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    1. Tian, Weilun & Guo, Junru & Li, Dongyan & Wang, Jiarui, 2025. "Creditor protection shocks and corporate cash holdings: Insights from online judicial auctions," Economic Modelling, Elsevier, vol. 151(C).

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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