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http://dx.doi.org/10.13106/jbees.2020.vol10.no4.5

Do Government Subsidies Crowd In or Crowd Out R&D Investment? Evidence from China's Animal Husbandry Companies  

XU, Jian (School of Management, Qingdao Agricult ural University)
SIM, Jaewoo (Department of Acc ounting, Sangji University)
Publication Information
Asian Journal of Business Environment / v.10, no.4, 2020 , pp. 5-13 More about this Journal
Abstract
Purpose: The purpose of this paper is to empirically investigate the relationship between government subsidies and research and development (R&D) investment of animal husbandry companies in China. The moderating effects of firm size, debt ratio, and firm profitability on this relationship are also examined. Research design, data and methodology: The analysis is based on 14 animal husbandry companies listed on the Shanghai and Shenzhen stock exchanges over the period of 2012-2016. Data are obtained from the China Stock Market & Accounting Research (CSMAR) database and the RESSET database, and multiple regression analysis is utilized with the aid of Stata. Results: The empirical results show that government subsidies can promote R&D investment of animal husbandry companies in China. In addition, firm size, debt ratio, and firm profitability have positive moderating effects on the relationship between government subsidies and R&D investment. Conclusions: Based on the results, the paper concludes that government subsidies play an important role in the process of R&D of China's animal husbandry companies. This paper recommends that managers of animal husbandry companies should enhance the utilization efficiency of government subsidies and put great emphasis on R&D investment. The policymakers should implement more incentives to encourage animal husbandry companies to invest more in R&D.
Keywords
Government Subsidies; R&D Investment; Animal Husbandry Companies;
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