Abstract
ABSTRACT This study investigates whether business group (BG) affiliation helps member firms overcome market imperfections in accessing capital for research and development (R&D). Using the data of Chinese listed firms, we find that BG affiliation is positively associated with firms’ R&D intensity. Moreover, the positive association between BG affiliation and R&D intensity is more pronounced when firms are affiliated to a larger BG or the firms’ own financial constraints are higher. We document that BG affiliation has stronger impacts on R&D investment in regions with lower-level marketization than in ones with higher marketization. Our findings provide new evidence for institutional void theory in China.
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