The Role of Investor Protection on Corporate R&D

Abstract

This study investigates the impact of investor protection on corporate R&D investment using panel data from Chinese A-share listed companies spanning 2015 to 2022. By employing OLS regression, mediation, and moderation analyses, the results demonstrate that robust investor protection mechanisms significantly enhance corporate R&D expenditures. The mediation analysis reveals that investor protection alleviates financing constraints and improves information disclosure quality, both of which serve as key channels for fostering R&D investment. Furthermore, internal control systems and media attention are identified as positive moderators, amplifying the beneficial effects of investor protection on R&D. In contrast, the equity Herfindahl index (HHI) does not exhibit a significant moderating role. The study also highlights that financial leverage, profitability, and equity concentration negatively influence R&D, while revenue growth exerts a positive effect. These findings underscore the critical role of investor protection in driving corporate innovation and sustainable growth, offering valuable insights for policymakers and corporate managers aiming to optimize R&D strategies through improved governance frameworks.