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Political connection,government R&D subsidies and innovation efficiency: Evidence from China

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  • Wang, Lanfang
  • Wang, Yue
  • Zhou, Jing

Abstract

This paper explores the impact of political connection on the efficient use of government R&D subsidies to generate innovation outputs. Using a sample of Chinese listed companies from 2008-2017, we find that the association between government R&D subsidies and innovation outputs is significantly smaller for politically connected firms, suggesting that political connection is negatively associated with the efficiency of government R&D subsidies. We further find that the negative impact of political connection on the efficiency of government R&D subsidies is more severe when the political uncertainty is high. Our results are shown to be robust.

Suggested Citation

  • Wang, Lanfang & Wang, Yue & Zhou, Jing, 2022. "Political connection,government R&D subsidies and innovation efficiency: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322002124
    DOI: 10.1016/j.frl.2022.102953
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