R&amp;D expenditures, ultimate ownership and future performance: Evidence from China

Wang, Ruiqi; Wang, Fangjun; Xu, Luying; Yuan, Changhong

doi:10.1016/j.jbusres.2016.10.018

Cited by 110 publications

(65 citation statements)

References 47 publications

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“…These results indicate that firm value is increasing as state ownership increases. The coefficient on Leverage is negative and significant in columns (1) and (4), which is consistent with Ruiqi et al [18]. The coefficient on Assetgr is negative and significant in columns (3) and (6).…”

Section: The Non-linear Relationship Between Randd Investments and Firmsupporting

confidence: 89%

“…Our study complements these studies by showing an inverted U-shaped pattern between R&D investments and firm value in the Chinese setting.Our study also contributes to the literature examining the effect of state ownership on the relationship between R&D investments and firm value. In particular, our study extends and complements a recent paper by Ruiqi et al [18], which documents the positive impact of state ownership on the association between R&D expenditures and future firm performance. A study by Ruiqi et al [18] appears to be similar to ours; however, our study is different in several ways.…”

supporting

confidence: 85%

“…Prior studies provide mixed results as to the relationship between leverage and firm value. Ferreira and Matos [46] show that leverage is positively related to firm value, while Ruiqi et al [18] suggest that leverage is negatively related to firm value. We control for Assetgr as a proxy for investment opportunities, measured as the percentage of annual growth in total assets.…”

Section: Empirical Modelmentioning

confidence: 99%

“…Based on prior studies [3,5,18,27,44,45], we choose the following control variables. Specifically, we control for State ownership, Leverage, Assetgr, Lnasset, and Profitability.…”

Section: Empirical Modelmentioning

confidence: 99%

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R&D Investments and Firm Value: Evidence from China

et al. 2018

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This study examines whether R&D investments are non-linearly related to firm value. Using a sample of 563 Chinese listed firms between 2005 and 2013, we find that R&D investments have an inverted U-shaped relationship with firm value. This finding indicates that as R&D investments increase, firm value increases to a certain level and then decreases. We further find the presence of an inverted U-shaped relationship in firms with low state ownership. However, we find no evidence of a non-linear relationship in firms with high state ownership. These results suggest that the inverted U-shaped relationship is more pronounced for firms with low state ownership than for firms with high state ownership. Moreover, we find that there is an inverted U-shaped relationship between R&D investments and firm value in firms with high growth opportunities. In contrast, for firms with low growth opportunities, their relationship has a U-shaped pattern. These results are robust to robust standard errors clustered at the firm level, controlling for industry fixed effects, and omitting variable biases. Overall, our empirical evidence extends and complements the literature on the R&D investments-firm value relationship by considering their non-linear pattern. This study provides important implications for stakeholders, such as investors, policy makers, standard-setters, state owners, and regulators. Specifically, our findings can be useful to policy makers who pursue long-term performance objectives.Sustainability 2018, 10, 4133 2 of 17 the growth of new industries. China's total spending on research and development is estimated to have been 1.76 trillion yuan (around $279 billion) in 2017 [13]. R&D growth in Chinese firms had led the global market in its scale and scope by capitalizing their advantages in competitive costs to promote innovation and reap the technological capabilities for success in the world market [14]. Second, in China, both state-owned enterprises (SOEs) and private firms coexist. In particular, SOEs account for a substantial proportion of China's economy and their political connection with the Chinese government likely facilitate investment financing [15,16], enabling them to invest in more R&D. Similarly, Wu [17] points out that SOEs are likely to engage in more R&D investments.We test a non-linear relationship between R&D investments and firm value using a sample of 563 Chinese listed firms between 2005 and 2013. In our analyses, we employ three estimation specifications, such as pooled ordinary least squares (OLS) regressions, fixed-effect panel regressions, and dynamic panel generalized method of moments (GMM) estimators. We find that R&D investments have an inverted U-shaped relationship with firm value. As an additional analysis, we also examined the association between R&D investments and firm value in terms of high and low state ownership. We find that there is an inverted U-shaped pattern between R&D investments and firm value in firms with low state ownership. However, we find no evidence of a non-linear...

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Section: The Non-linear Relationship Between Randd Investments and Firmsupporting

confidence: 89%

supporting

confidence: 85%

Section: Empirical Modelmentioning

confidence: 99%

“…Based on prior studies [3,5,18,27,44,45], we choose the following control variables. Specifically, we control for State ownership, Leverage, Assetgr, Lnasset, and Profitability.…”

Section: Empirical Modelmentioning

confidence: 99%

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R&D Investments and Firm Value: Evidence from China

et al. 2018

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“…Although a high level of R&D intensity does not guarantee a firm's performance (profitability, firm value), enterprises that invest excessively in R&D are likely to achieve greater performance (Shin et al, 2017). In accordance with Ruiqi et al (2017), R&D investment can improve enterprises' performance by lowering production costs, which is critical for enterprises' survival. Hay and Morris (1979) suggest that a high level of investment in R&D is commonly a high risk and high return approach that is attractive for all shareholders in expectation of better business performance.…”

Section: Investment In Randd and Performancementioning

confidence: 99%

Intangible Assets Investment and Firms’ Performance: Evidence From Small and Medium-Sized Enterprises in Korea

Seo

Kim

2020

Journal of Business Economics and Management

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While many studies have examined the relationship between investment in intangibles assets and performance in large corporations, current research is lacking in regard to intangible investments in small and medium enterprises (SMEs). This study looks at SMEs in which intangible investments would usually be minor because they tend to consider intangible investment as an inefficient cost and concentrate on investments in tangible assets. This paper aims to contribute to the current literature and suggests that investment in the intangible assets of (human capital, advertising, R&D) is essential for SMEs pursuing superior firm performance. Actual data collected from 173 SMEs in Korea were analyzed employing hierarchical regression methodology. Results indicate that all three intangible resources have a positive effect on a firm's profitability and value. Interestingly, this research finds that investment in advertising has the most influential impact on a firm's profitability and value. This study has implications for SMEs in achieving their profitability and value. The results in this study highlight that intangible investment is not a waste of money for SMEs, and that business managers could strategically utilize these three key contributors (human capital, advertising, R&D) and adopt investment in intangible assets to accomplish their managerial goals.

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R&D investment and future firm performance: The role of managerial overconfidence and government ownership

et al. 2020

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We investigate the relationship among managerial overconfidence (MO), government ownership, and research and development (R&D) investment using data from Vietnamese public companies for the period 2007–2016. We also investigate how R&D investment, given MO and government ownership, affect future firm performance. Our results indicate that MO and government ownership are positively related to R&D investment. Conceptually, this study investigates novel factors affecting of R&D investment and their role in improving firm performance. Overall, this study emphasizes the importance of R&D investment in the corporate world, improving firm performance and, ultimately, economic prosperity.

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R&D expenditures, ultimate ownership and future performance: Evidence from China

Cited by 110 publications

References 47 publications

R&D Investments and Firm Value: Evidence from China

R&D Investments and Firm Value: Evidence from China

Intangible Assets Investment and Firms’ Performance: Evidence From Small and Medium-Sized Enterprises in Korea

R&D investment and future firm performance: The role of managerial overconfidence and government ownership

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