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Incentive effect of tax preferences towards the technological innovation of enterprises——Based on China’s GEM listed companies

Author

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  • Liang Ding
  • Yunfeng Wu
  • Junxia Long

Abstract

The long R&D process, the high risk, and the externalities of technological innovation are challenges that enterprises have to meet when making decisions on R&D investment. Governments share this risk with enterprises through preferential tax policies. We summarized China’s preferential tax policies related to enterprises and R&D innovation, and used panel data of listed enterprises from 2013 to 2018 in the Growth Enterprises Market (GEM) of the Shenzhen Stock Exchange to explore the incentive effects of current tax policies on the R&D innovation of enterprises. Through empirical analysis, we found that tax incentives significantly motivate R&D innovation input and promote output. In addition, we found that the income tax incentives are greater than that of the circulation tax, since the profitability of enterprise has a positive correlation with R&D investment. Meanwhile, the size of the enterprise is negatively correlated with the intensity of R&D investment.

Suggested Citation

  • Liang Ding & Yunfeng Wu & Junxia Long, 2023. "Incentive effect of tax preferences towards the technological innovation of enterprises——Based on China’s GEM listed companies," PLOS ONE, Public Library of Science, vol. 18(4), pages 1-13, April.
    • Handle: RePEc:plo:pone00:0282692
    DOI: 10.1371/journal.pone.0282692
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    References listed on IDEAS

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    1. Yohei Kobayashi, 2014. "Effect of R&D tax credits for SMEs in Japan: a microeconometric analysis focused on liquidity constraints," Small Business Economics, Springer, vol. 42(2), pages 311-327, February.
    2. Sun, Chuanwang & Zhan, Yanhong & Du, Gang, 2020. "Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies," Energy Economics, Elsevier, vol. 86(C).
    3. Doh, Soogwan & Kim, Byungkyu, 2014. "Government support for SME innovations in the regional industries: The case of government financial support program in South Korea," Research Policy, Elsevier, vol. 43(9), pages 1557-1569.
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