The Impact Of Government Subsidies And R&D Deductions On Corporate Innovation Investment

Technological innovation is the fuel of economic growth and the fountainhead of power to continuously improve people's living standards.This has increasingly become the consensus of the whole society.After more than 40 years of reform and opening-up,China's economic growth has gradually slowed down and has now entered a new normal of development.In the new economic situation,technological progress plays an important role in promoting the majorization and escalation of the industrial structure.Therefore,how to motivate enterprises to engage in innovative activities is a practical issue facing China at this stage.In recent years,China has implemented many policies and invested a lot of resources to support corporate R&D activities.What is the effect of the policy implementation?It has aroused the attention of the policy makers and the public.Based on the data of high-tech companies listed on A-share from 2014 to 2018,this paper studies the impact of government subsidies and R&D deductions on corporate innovation investment and analyzes the effects of this effect under different ownership concentrations and life cycles difference.The research results show that:First,both government subsidies and R&D deductions can significantly motivate enterprises to invest in innovation and the incentive effect of government subsidies is better than that of R&D deductions.Each 1%increase in government subsidies will drive corporate innovation investment increased by 0.08%and each additional 1%of the R&D deduction can only lead to an increase of 0.01%in corporate innovation investment;Second,the government subsidy has a stronger incentive effect on the innovation investment of growing-up enterprises than the mature period and the R&D deduction on the innovation investment of mature enterprises has a stronger incentive effect than the growing period;Third,the incentive effect of government subsidies and R&D deductions is directly proportional to the degree of corporate equity dispersion,that is,the more dispersed the equity,the stronger the government subsidies and R&D deductions.Based on theoretical and empirical research,we propose the following policy recommendations:First,improve the efficiency of government funding;Second,attach importance to indirect government funding methods;third,share government funding information;fourth,implement differentiated funding policies;fifth,improve the review system and technology evaluation.