Affiliation:
1. Jiangxi University of Finance and Economics
Abstract
Abstract
This paper explores the correlation between performance-based budgeting and corporate innovation in China, utilizing a quasi-natural experiment. The study reveals a significant rise in patents among firms headquartered in provinces that have implemented performance-based budgeting compared to those that have not. The increase is particularly pronounced for firms operating in provinces facing higher financial pressure and stronger government audits. The positive impact of performance-based budgeting on corporate innovation is particularly noteworthy in state-owned firms, firms exhibiting good corporate governance practices, or firms facing high financial constraints. Collectively, the evidence implies that performance-based budgeting can serve as a catalyst for corporate innovation.
JEL: H61; M21; M41
Publisher
Research Square Platform LLC
Reference42 articles.
1. Optimal taxation and R&D policies;Akcigit U;Econometrica,2022
2. Law, finance, and economic growth in China;Allen F;Journal of financial economics,2005
3. Arrow, K.(1962).“Economic Welfare and the Allocation of Resources for Invention,” in: Nelson(eds.), The Rate and Direction of Inventive Activity: Economic and Social Factor, 609–626.
4. How much should we trust staggered difference-in-differences estimates?;Baker AC;Journal of Financial Economics,2022
5. Big bad banks? The winners and losers from bank deregulation in the United States;Beck T;The Journal of Finance,2010