Does Strict Regulation of Capital Markets Enhance Firms' Ability to Spend on R&D?
An Empirical Analysis Against the Newly Enacted Securities Laws
DOI:
https://doi.org/10.54097/0veppd85Keywords:
Securities Law, Difference-in-Differences (DID), Capital market regulationsAbstract
China's updated Securities Law aims to promote enterprise value creation, optimize resource allocation, and foster high-quality economic development, with a core focus on protecting small and medium-sized investors, strengthening information disclosure, and enhancing financial market stability. This study employs the Difference-in-Differences (DID) method to empirically analyze the impact of the new law on firms' R&D investment. Results show that stringent capital market regulation significantly boosts R&D expenditure, particularly in heavily polluting industries and non-manufacturing sectors. The mechanism analysis reveals that improved disclosure quality and reduced financing constraints (measured by the SA index) mediate this effect, while internal control quality and equity concentration moderate the relationship. These findings provide theoretical and empirical support for optimizing capital market regulations to stimulate corporate innovation.
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