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Local political turnover, R&D investment leap and corporate innovation performance: Evidence from China
[Connecting the Dots: Bringing External Corporate Governance into the Corporate Governance Puzzle]

Author

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  • Zhenyu Jiang
  • Zongjun Wang
  • Chengxiao Feng
  • Lin Yi

Abstract

This study explores how local political turnover affects corporate R&D investment and innovation performance in an emerging economy like China. Based on the panel data of 956 listed firms in China, we found that local officials’ turnover has a direct negative effect on both R&D investment leap and corporate innovation performance. Furthermore, local officials’ turnover inhibits innovation performance provided the new officials are transferred from other places but improves innovation performance provided the old officials are dismissed for corruption or other violations. Finally, R&D investment leap positively moderate the relationship between local officials’ turnover and corporate innovation performance. These findings contribute to the literature on how political uncertainty at the regional level affects R&D and innovation activities at the firm level and provide significant guidance for both the government and manufacturers in China.

Suggested Citation

  • Zhenyu Jiang & Zongjun Wang & Chengxiao Feng & Lin Yi, 2022. "Local political turnover, R&D investment leap and corporate innovation performance: Evidence from China [Connecting the Dots: Bringing External Corporate Governance into the Corporate Governance Pu," Science and Public Policy, Oxford University Press, vol. 49(2), pages 347-364.
    • Handle: RePEc:oup:scippl:v:49:y:2022:i:2:p:347-364.
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    File URL: http://hdl.handle.net/10.1093/scipol/scab090
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