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The impacts of internal capital allocation efficiency on R&D investments: evidence from China

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  • Hai-Yun Ren
  • Ching-Chi Hsu
  • Gen-Fu Feng
  • Jing Jia
  • Wei-Che Tsai

Abstract

This research utilizes hand-collected data on business groups’ pyramidal equity structure to examine the impacts of internal capital markets on research and development (R&D) investments in China. Empirical findings show that the allocation efficiency of the internal capital market positively correlates with R&D investments. We further provide evidence of a U-shape relationship between pyramidal layers and R&D investments for state-owned business groups. For non-state-owned business groups, however, there is an opposite impact pattern on the relation between internal capital markets and R&D investments.

Suggested Citation

  • Hai-Yun Ren & Ching-Chi Hsu & Gen-Fu Feng & Jing Jia & Wei-Che Tsai, 2021. "The impacts of internal capital allocation efficiency on R&D investments: evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 28(14), pages 1195-1201, August.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:14:p:1195-1201
    DOI: 10.1080/13504851.2020.1804044
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    Cited by:

    1. Zhiwen Su & Mingyu Zhang & Jianjun Sun & Wenbing Wu, 2023. "Agribusiness diversification and technological innovation efficiency: A U‐shaped relationship," Agribusiness, John Wiley & Sons, Ltd., vol. 39(2), pages 322-346, March.

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