Financialization, Government Subsidies, and Manufacturing R&D Investment: Evidence from Listed Companies in China

Increasing research and development (R & D) investment is the key to the sustainable development of the manufacturing industry. With the development of financialization, manufacturing enterprises allocate greater funds to the financial field, which may significantly affect their level of R & D investment. However, few studies have explored the relationship between the two. Using the data of manufacturing listed companies in China from 2007 to 2018, this paper investigates the impact of financialization on manufacturing R & D investment and further analyzes the moderating effect of government subsidies on the relationship between the two, mainly using Heckman's two-step approach. The results show that, on the whole, financialization has a significant restraining effect on China's manufacturing R & D investment, and that government subsidies exacerbate this negative effect. However, there are some differences in the statistical significance and in the level of influence of financialization on R & D investment, which are based on enterprise type, industry, region, and financing constraints. Additionally, the moderating effects of government subsidies under heterogeneous samples differ in sign, statistical significance, and impact magnitude. This paper not only conducts a comprehensive study on the impact of financialization on manufacturing R & D investment but also introduces government subsidies as the moderating variable into the analysis, which is conducive to a better understanding of the relationship between corporate financialization and manufacturing R & D investment in China.