IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v59y2023i11p3391-3401.html
   My bibliography  Save this article

Spillover Effects of Preventive Regulation and Corporate R&D Investment Catering: Evidence from China

Author

Listed:
  • Yan Yu
  • Yi-Tsung Lee

Abstract

This paper explores the spillover effect of proactive preventive regulation represented by R&D expense inquiry letters (hereafter, RDILs) and its impact mechanism. Using deterrence theory and Chinese A-share listed firms from 2015–2020, we find that the industry receiving RDILs has a regulation effect on the R&D investment intensity catering motive of the non-receiving firms in the industry. That is, there is an industry spillover effect of RDILs regulation. The results of the regulatory mechanism analysis show that the industry spillover effect of RDILs regulation is more pronounced for non-receiving firms with more severe R&D manipulation intensity or weaker product market competitive positions. Further analysis shows that the inclusion of peer comparison questions in the RDILs increases the industry spillover effect of the inquiry letter regulation. We also find that the industry spillover effects of RDILs regulation result in higher future innovation quality for non-receiving firms. Overall, our study enriches our understanding of the effectiveness of inquiry letter regulation and provides some guidance for regulators’ regulatory practice.

Suggested Citation

  • Yan Yu & Yi-Tsung Lee, 2023. "Spillover Effects of Preventive Regulation and Corporate R&D Investment Catering: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(11), pages 3391-3401, September.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:11:p:3391-3401
    DOI: 10.1080/1540496X.2023.2218969
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2023.2218969
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2023.2218969?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Kelong & Xie, Chi & Ouyang, Yingbo & Mo, Tingcheng & Feng, Yusen, 2024. "Tail risk spillovers in the stock and forex markets at the major emergencies: Evidence from the G20 countries," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    2. Liu, Min & He, Jiurui & Liu, Nana, 2025. "Exploration of the relationship between firm growth and R&D investment under monetary policy adjustment," Finance Research Letters, Elsevier, vol. 78(C).
    3. Jin, Long & Song, Yuhang & Pan, Changchun, 2024. "Does peer firms' debt default have positive externalities: The investment efficiency perspective," Finance Research Letters, Elsevier, vol. 59(C).
    4. Zhang, Mingming & Zheng, Weijia & Lee, Chien-Chiang, 2024. "Political connections and investment efficiency of renewable energy enterprises: The role of marketization," Energy Economics, Elsevier, vol. 139(C).
    5. Cui, Wenxin & Qiao, Cuixia, 2024. "Customer structure and R&D investment: Based on innovative trait," Finance Research Letters, Elsevier, vol. 66(C).
    6. Song, Yuchen & Zhu, Mingqi & Wang, Ye, 2025. "Corporate financialization, digital transformation, and industrial supply chain resilience: Mechanisms based on R&D investment and financial regulation," International Review of Financial Analysis, Elsevier, vol. 102(C).
    7. Wang, Xin & Ma, Chaoqun & Yao, Zheng, 2024. "The double-edged sword effect of digital capability on green innovation: Evidence from Chinese listed industrial firms," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 321-339.
    8. Huang, Yisong & Sun, Ze & Huang, Yan, 2025. "Exploring the effect of VAT carryforward and refund policy on enhancing innovation efficiency among China's A-share listed firms," Finance Research Letters, Elsevier, vol. 72(C).
    9. Hu, Chun & He, Haoyang & Wang, Fei & SHIN, YEON-SOO, 2025. "Management equity incentives, market dynamics, and corporate R&D investment," Finance Research Letters, Elsevier, vol. 76(C).
    10. Lin, Yinghua & Ye, Jingjing, 2024. "The impact of corporate R&D on the transformation of intellectual property into intangible assets," Finance Research Letters, Elsevier, vol. 70(C).
    11. Chen, Sichong & Liang, Shan & Chen, Meng & Zhang, Didi, 2025. "Investigation into the effects of equity incentives for executives and R&D personnel on corporate financialization," Finance Research Letters, Elsevier, vol. 77(C).
    12. Zhou, Jia, 2025. "Impact of non-financial listed companies' investment in wealth management products on industrial investment efficiency and R&D expenditure: A dual effect analysis," International Review of Financial Analysis, Elsevier, vol. 97(C).
    13. Fu, Yanyu, 2024. "Enterprises’ internationalization, R&D investment and enterprise performance," Finance Research Letters, Elsevier, vol. 67(PA).
    14. Chen, Hanjun & Qian, Long & Gu, Haohao & Chen, Qianqian & Zheng, Ke & Zhang, Yong & Dong, Sha, 2025. "Patent quality, R&D investment, and the profitability of technology-based firms," Finance Research Letters, Elsevier, vol. 76(C).
    15. Gao, Yuanqi & Zhang, Lingxiao & Li, Chuan & Luo, Qi, 2025. "Does R&D make stocks lottery-like?," International Review of Financial Analysis, Elsevier, vol. 97(C).
    16. Geng, Haipeng & Su, Zhongfeng & Wang, Junkai, 2025. "The impact of management equity incentive on firms' risk-taking under different monitoring conditions," International Review of Financial Analysis, Elsevier, vol. 97(C).
    17. Xiao, Yineng, 2025. "Relationship between data elements, industry concentration, and firms’ breakthrough innovation," Finance Research Letters, Elsevier, vol. 72(C).
    18. Zhao, Yong & Cheng, Shihui, 2025. "Can stronger capital markets regulation increase the level of R&D investments?," International Review of Financial Analysis, Elsevier, vol. 102(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:59:y:2023:i:11:p:3391-3401. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.