Government Incentive and R&D Innovation: Based on the Research of Environmental Protection Listed Companies

Abstract

We selected the public disclosure data of 158 listed companies in China’s environmental protection industry and analyzed the impact of two types of government incentives (government subsidies and tax incentives) on the R&D and innovation activities of companies. The study also analyzed the differences caused by the location and nature of ownership of the companies. The results showed that both government subsidies and tax incentives have a significant effect on R&D and innovation in the environmental protection industry. Furthermore, the impact of government incentives on enterprise innovation is heterogeneous. Compared with the western region, the impact of government subsidies and tax incentives is more significant for the eastern and middle regions. Similarly, compared with state-owned enterprises, the impact of government subsidies and tax incentives is more significant for non-state-owned enterprises.