The Impact of Fiscal Policies on R&D at the Firm Level

Yafeng Hu; Ke Gao

doi:doi:10.11648/j.jfa.20190701.13

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The Impact of Fiscal Policies on R&D at the Firm Level

Yafeng Hu, Ke Gao

Published in Journal of Finance and Accounting (Volume 7, Issue 1)

Received: 20 December 2018 Published: 1 February 2019

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Abstract

The existing researches about the effects of public policies on promoting enterprise innovation are mostly on large enterprises, but few on small and medium-sized enterprises. The literature on small and medium-sized enterprises in developing countries is even less. As an important part of the world economy and an important representative of developing countries, it is necessary to study the impact of China's public subsidies and tax incentives on the innovation and research and development of Chinese SMEs. Based on the relevant enterprise data, using the LSDV model, this paper empirically finds that the Chinese government's fiscal subsidy policies indeed promote enterprise innovation. After controlling for the year fixed effect and industry effect, government subsidies did stimulate enterprises' R&D investment, but the stimulus effect was very weak. Considering the endogeneity of public subsidies, the author added the lag term of public subsidies into the model, and the promotion effect of the policy was significantly enhanced. With the expansion of enterprise scale and the passage of enterprise establishment years, enterprise innovation investment decreases. The conclusion of this paper provides a basis for the government to formulate relevant policies. Government subsidies should be increased for newly established companies and for small and micro businesses.

Published in	Journal of Finance and Accounting (Volume 7, Issue 1)
DOI	10.11648/j.jfa.20190701.13
Page(s)	17-21
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Innovation, Financial Subsidies, Small and Medium-Sized Enterprises, Research and Development Expenditure

References

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[5]	Almus, M. and D. Czarnitzki (2003). "The Effects of Public R&D Subsidies on Firms' Innovation Activities." Journal of Business & Economic Statistics 21 (2): 226-236.
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[11]	Czarnitzki, D., P. Hanel, et al. (2011). "Evaluating the impact of R&D tax credits on innovation: A micro econometric study on Canadian firms." Research Policy 40 (2): 217-229.
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[16]	Holger Görg, Eric Strobl, Do Government Subsidies Stimulate Training Expenditure? Micro econometric Evidence from Plant-Level Data. Southern Economic Journal Vol. 72, No. 4 (Apr., 2006), pp. 860-876.
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APA Style

Yafeng Hu, Ke Gao. (2019). The Impact of Fiscal Policies on R&D at the Firm Level. Journal of Finance and Accounting, 7(1), 17-21. https://doi.org/10.11648/j.jfa.20190701.13

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ACS Style

Yafeng Hu; Ke Gao. The Impact of Fiscal Policies on R&D at the Firm Level. J. Finance Account. 2019, 7(1), 17-21. doi: 10.11648/j.jfa.20190701.13

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AMA Style

Yafeng Hu, Ke Gao. The Impact of Fiscal Policies on R&D at the Firm Level. J Finance Account. 2019;7(1):17-21. doi: 10.11648/j.jfa.20190701.13

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@article{10.11648/j.jfa.20190701.13,
  author = {Yafeng Hu and Ke Gao},
  title = {The Impact of Fiscal Policies on R&D at the Firm Level},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {1},
  pages = {17-21},
  doi = {10.11648/j.jfa.20190701.13},
  url = {https://doi.org/10.11648/j.jfa.20190701.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190701.13},
  abstract = {The existing researches about the effects of public policies on promoting enterprise innovation are mostly on large enterprises, but few on small and medium-sized enterprises. The literature on small and medium-sized enterprises in developing countries is even less. As an important part of the world economy and an important representative of developing countries, it is necessary to study the impact of China's public subsidies and tax incentives on the innovation and research and development of Chinese SMEs. Based on the relevant enterprise data, using the LSDV model, this paper empirically finds that the Chinese government's fiscal subsidy policies indeed promote enterprise innovation. After controlling for the year fixed effect and industry effect, government subsidies did stimulate enterprises' R&D investment, but the stimulus effect was very weak. Considering the endogeneity of public subsidies, the author added the lag term of public subsidies into the model, and the promotion effect of the policy was significantly enhanced. With the expansion of enterprise scale and the passage of enterprise establishment years, enterprise innovation investment decreases. The conclusion of this paper provides a basis for the government to formulate relevant policies. Government subsidies should be increased for newly established companies and for small and micro businesses.},
 year = {2019}
}

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TY  - JOUR
T1  - The Impact of Fiscal Policies on R&D at the Firm Level
AU  - Yafeng Hu
AU  - Ke Gao
Y1  - 2019/02/01
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190701.13
DO  - 10.11648/j.jfa.20190701.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 17
EP  - 21
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190701.13
AB  - The existing researches about the effects of public policies on promoting enterprise innovation are mostly on large enterprises, but few on small and medium-sized enterprises. The literature on small and medium-sized enterprises in developing countries is even less. As an important part of the world economy and an important representative of developing countries, it is necessary to study the impact of China's public subsidies and tax incentives on the innovation and research and development of Chinese SMEs. Based on the relevant enterprise data, using the LSDV model, this paper empirically finds that the Chinese government's fiscal subsidy policies indeed promote enterprise innovation. After controlling for the year fixed effect and industry effect, government subsidies did stimulate enterprises' R&D investment, but the stimulus effect was very weak. Considering the endogeneity of public subsidies, the author added the lag term of public subsidies into the model, and the promotion effect of the policy was significantly enhanced. With the expansion of enterprise scale and the passage of enterprise establishment years, enterprise innovation investment decreases. The conclusion of this paper provides a basis for the government to formulate relevant policies. Government subsidies should be increased for newly established companies and for small and micro businesses.
VL  - 7
IS  - 1
ER  -

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Author Information

Yafeng Hu

School of China Academy of Public Finance and Public Policy, Central University of Finance and Economics, Beijing, P. R. China
Ke Gao

PBC School of Finance, Tsinghua University, Beijing, P. R. China

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APA Style

Yafeng Hu, Ke Gao. (2019). The Impact of Fiscal Policies on R&D at the Firm Level. Journal of Finance and Accounting, 7(1), 17-21. https://doi.org/10.11648/j.jfa.20190701.13

Copy | Download

ACS Style

Yafeng Hu; Ke Gao. The Impact of Fiscal Policies on R&D at the Firm Level. J. Finance Account. 2019, 7(1), 17-21. doi: 10.11648/j.jfa.20190701.13

Copy | Download

AMA Style

Yafeng Hu, Ke Gao. The Impact of Fiscal Policies on R&D at the Firm Level. J Finance Account. 2019;7(1):17-21. doi: 10.11648/j.jfa.20190701.13

Copy | Download

@article{10.11648/j.jfa.20190701.13,
  author = {Yafeng Hu and Ke Gao},
  title = {The Impact of Fiscal Policies on R&D at the Firm Level},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {1},
  pages = {17-21},
  doi = {10.11648/j.jfa.20190701.13},
  url = {https://doi.org/10.11648/j.jfa.20190701.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190701.13},
  abstract = {The existing researches about the effects of public policies on promoting enterprise innovation are mostly on large enterprises, but few on small and medium-sized enterprises. The literature on small and medium-sized enterprises in developing countries is even less. As an important part of the world economy and an important representative of developing countries, it is necessary to study the impact of China's public subsidies and tax incentives on the innovation and research and development of Chinese SMEs. Based on the relevant enterprise data, using the LSDV model, this paper empirically finds that the Chinese government's fiscal subsidy policies indeed promote enterprise innovation. After controlling for the year fixed effect and industry effect, government subsidies did stimulate enterprises' R&D investment, but the stimulus effect was very weak. Considering the endogeneity of public subsidies, the author added the lag term of public subsidies into the model, and the promotion effect of the policy was significantly enhanced. With the expansion of enterprise scale and the passage of enterprise establishment years, enterprise innovation investment decreases. The conclusion of this paper provides a basis for the government to formulate relevant policies. Government subsidies should be increased for newly established companies and for small and micro businesses.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Fiscal Policies on R&D at the Firm Level
AU  - Yafeng Hu
AU  - Ke Gao
Y1  - 2019/02/01
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190701.13
DO  - 10.11648/j.jfa.20190701.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 17
EP  - 21
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190701.13
AB  - The existing researches about the effects of public policies on promoting enterprise innovation are mostly on large enterprises, but few on small and medium-sized enterprises. The literature on small and medium-sized enterprises in developing countries is even less. As an important part of the world economy and an important representative of developing countries, it is necessary to study the impact of China's public subsidies and tax incentives on the innovation and research and development of Chinese SMEs. Based on the relevant enterprise data, using the LSDV model, this paper empirically finds that the Chinese government's fiscal subsidy policies indeed promote enterprise innovation. After controlling for the year fixed effect and industry effect, government subsidies did stimulate enterprises' R&D investment, but the stimulus effect was very weak. Considering the endogeneity of public subsidies, the author added the lag term of public subsidies into the model, and the promotion effect of the policy was significantly enhanced. With the expansion of enterprise scale and the passage of enterprise establishment years, enterprise innovation investment decreases. The conclusion of this paper provides a basis for the government to formulate relevant policies. Government subsidies should be increased for newly established companies and for small and micro businesses.
VL  - 7
IS  - 1
ER  -

Copy | Download