Financing constraints, tax incentives and R&D investment: Evidence from traditional Chinese medicine industry / 中草药

ABSTRACT

Innovation plays an important role in the development of the traditional Chinese medicine enterprises, whereas financing constraints may restrain the investment activities. Therefore, whether financing constraints may impact the R&D investment of traditional Chinese medicine enterprises is worthy of being studied. Based on a sample of listed A-share firms in traditional Chinese medicine industry from 2009 to 2018 in China, we investigate the relationship between financing constraints and R&D investment. It is found that financing constraints have a significantly negative effect on R&D investment. In addition, the tax incentives may moderate the negative relation between financing constraints and R&D investment. This study highlights the research on stimulation of R&D investment and provides valuable enlightenment to policy makers and regulators.