Abstract
ABSTRACT This paper examines the impact of Guangdong provincial R&D subsidies policy on corporate R&D investment.1 1 Guangdong has ranked first in terms of GDP in all Chinese provinces for many years. There are 643 Chinese A-share stock market listed firms in Guangdong in 2019. Using a large sample of Chinese firms for the 2011–2017 period and DID methodology, we find that government R&D subsidies have a negative and significant effect on corporate R&D investment. Our findings are robust to a battery of sensitivity tests. Our study supports the ‘crowd out effect’ of government R&D subsidies.
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