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Does information infrastructure curb corporate R&D manipulation? Evidence from China

Author

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  • Xiong, Jiacai
  • Yang, Zelin
  • Zhu, Yushu

Abstract

This paper examines the impact of information infrastructure on corporate R&D manipulation. We exploit the staggered rollout of broadband infrastructure in 117 cities under the Broadband China strategy (BCS) as an exogenous positive shock. On a sample of Chinese listed firms from 2010 to 2019, our difference-in-differences results find a significant reduction in R&D manipulation for firms in BCS-pilot cities following the policy implementation. Cross-sectional tests show that the effect of the BCS on R&D manipulation is more pronounced in non-state-owned enterprises, smaller firms, and firms with low coverages of analysts or media. Mechanism analyses indicate that the decline can be attributed to attenuated information asymmetry and eased financial constraints.

Suggested Citation

  • Xiong, Jiacai & Yang, Zelin & Zhu, Yushu, 2024. "Does information infrastructure curb corporate R&D manipulation? Evidence from China," Economics Letters, Elsevier, vol. 235(C).
    • Handle: RePEc:eee:ecolet:v:235:y:2024:i:c:s0165176524000466
    DOI: 10.1016/j.econlet.2024.111562
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    Cited by:

    1. Chen, Mengtao, 2024. "ESG performance and firm misconduct: Evidence from R&D manipulation," Economics Letters, Elsevier, vol. 237(C).

    More about this item

    Keywords

    Information infrastructure; R&D manipulation; Information asymmetry; Financial constraints; Broadband China strategy;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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