The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China |
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| Authors: | Jin Chen Cheng Suang Heng Bernard CY Tan Zhijie Lin |
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| Institution: | 1. School of Business, East China University of Science and Technology, No. 130 Meilong Road, Shanghai, 200237, China;2. Department of Information Systems and Analytics, National University of Singapore, Computing 2, 15 Computing Drive, 117418, Singapore;3. Department of Marketing and Electronic Business, Nanjing University, 22 Hankou Road, Gulou, Nanjing, 210093, China |
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| Abstract: | This study investigates how R&D subsidy and non-R&D subsidy affect entrepreneurial firms’ initial public offering (IPO) performance in an emerging economy like China. Analyzing data from 269 IT (information technology) entrepreneurial firms in China, we found that R&D subsidy has an inverted U-shape effect on IPO performance, while non-R&D subsidy has a positive effect on IPO performance. Furthermore, both state ownership and patent intensity moderate the inverted U-shape relationship between R&D subsidy and IPO performance. In contrast, neither of them moderates the positive relationship between non-R&D subsidy and IPO performance. These findings contribute to the literature on the effectiveness of government subsidy by highlighting the symbolic effect of government subsidy on external financing in emerging economies, and offer important practical implications to entrepreneurial firms and government funding agencies in China. |
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| Keywords: | G32 H2 O32 O38 signaling effect R&D subsidy non-R&D subsidy state ownership patent intensity IPO performance |
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