Ownership structure and R&D spending: evidence from China's listed firms

Abstract

Purpose

This paper seeks to examine the effect of ownership concentration, inside ownership and state ownership on the R&D spending practices for China's listed firms. The paper argues that corporate ownership structures including ownership concentration, inside ownership and state ownership are important for corporate expenditures on R&D in China, whose firms present a high ownership concentration and a high level of state ownership.

Design/methodology/approach

The paper takes the form of an empirical study using a sample of 780 listed Chinese firms for six years from 2000 to 2005.

Findings

It is found that firms with concentrated share ownership have lower R&D spending, and firms with inside ownership have lower R&D spending. However, firms with a higher level of state ownership spend more on R&D.

Research limitations/implications

Given that corporate ownership structure and tax policy have changed dramatically in China in recent years, future studies should be conducted to explore the association between firms' R&D investment activities and those ownership structure and tax policy changes.

Social implications

This study is of interest to the policy makers, corporate management, and academics who wish to examine corporate R&D and innovation activities and those factors, including ownership structure, which are associated with R&D investment decisions.

Originality/value

This is the first study that examines the relationship between ownership and R&D spending for Chinese listed firms.

Citation

Zeng, T. and Lin, H. (2011), "Ownership structure and R&D spending: evidence from China's listed firms", Chinese Management Studies, Vol. 5 No. 1, pp. 82-93. https://doi.org/10.1108/17506141111118471