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The signal effect of Government R&D Subsidies in China: Does ownership matter?

Listed author(s):
  • Wu, Aihua
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    R&D subsidies as a policy instrument are used to reduce market failure, apart from its input and output additionality, the notion of behavioural additionality has caused increasingly interest. We focus on the signal/certification effect of behavioural additionality, which means that government grants may serve as a signal for private investors. The signal effect is a certification enhancing a firm's access to external finance. The objective is to examine the impact of different ownership nature to the signal/certification effect. We use data on Chinese listed corporations from 2009 to 2013. The results show that receiving R&D subsidies increases the likelihood that firms will raise external finance, and the state-owned enterprises can receive more subsidies than private enterprises. However, the signal effect of R&D grants is stronger in private enterprises than that in state-owned enterprises of China, indicating that the ownership nature does matter in the R&D subsidies certification effect. This paper enriches current literature of government R&D subsidies by providing empirical evidences in Chinese mixed market.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0040162516306679
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    Article provided by Elsevier in its journal Technological Forecasting and Social Change.

    Volume (Year): 117 (2017)
    Issue (Month): C ()
    Pages: 339-345

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    Handle: RePEc:eee:tefoso:v:117:y:2017:i:c:p:339-345
    DOI: 10.1016/j.techfore.2016.08.033
    Contact details of provider: Web page: http://www.sciencedirect.com/science/journal/00401625

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