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The impact of financial flexibility and directors’ academic experience on corporate R&D investments: a quantile regression approach

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  • Chai Bin Feng
  • Sultan Sikandar Mirza
  • Tanveer Ahsan
  • Ammar Ali Gull

Abstract

This study investigates the impact of financial flexibility and academic experience of a firm’s board on corporate R&D investments in China. It also explores the moderating role of directors’ academic experience on the relationship between financial flexibility and R&D investments. We apply ordinary least square, fixed effects and quantile regression analysis using panel data of 2,195 A-share firms listed on Shanghai and Shenzhen stock exchanges during the period from 2011 to 2018. We find that both financial flexibility and directors’ academic experience promote R&D investments of Chinese non-financial firms. We also observe that directors’ academic experience weakens the positive impact of financial flexibility on R&D investments for firms operating in underdeveloped financial regions, whereas it strengthens the positive impact of financial flexibility on R&D investments for firms operating in developed financial regions. Our quantile regression results suggest that academic experience has a highly significant positive moderating impact on the financial flexibility of lower R&D investment firms relative to high R&D investment firms. These results are robust to alternate proxy of financial flexibility and endogeneity issues due to reverse causality.

Suggested Citation

  • Chai Bin Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Ammar Ali Gull, 2022. "The impact of financial flexibility and directors’ academic experience on corporate R&D investments: a quantile regression approach," Applied Economics, Taylor & Francis Journals, vol. 54(17), pages 1974-1988, April.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:17:p:1974-1988
    DOI: 10.1080/00036846.2021.1983145
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    Cited by:

    1. Jing Wu & Chee Yoong Liew, 2024. "Revisiting the nexus between corporate social responsibility and corporate value: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2066-2085, May.
    2. Tanveer Ahsan & Sultan Sikandar Mirza & Ammar Ali Gull & Muhammad Ansar Majeed, 2023. "How to deal with customer and supplier concentration to attain sustainable financial growth? The role of business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4600-4619, November.
    3. Mirza, Sultan Sikandar & Miao, Yiyao & Corbet, Shaen & Scrimgeour, Frank & Goodell, John W., 2024. "Benefits of Top Management Team Education for Corporate Digital Transformation: A Critical Mass Perspective from China," Finance Research Letters, Elsevier, vol. 61(C).
    4. Sultan Sikandar Mirza & Chengming Huang & Adnan Khan, 2024. "Managing CEO duality and economic uncertainty: strategies for aligning corporate sustainability and innovation in China’s energy market," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 12815-12841, May.
    5. Hu, Jiamin & Li, Kailun & Xia, Yifei & Zhang, Jianing, 2023. "Gender diversity and financial flexibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 90(C).

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