Government-Guided Fund Investment and Sustained Corporate InnovationTheoretical Analysis and Empirical Testing

Government-guided fund investments provide financial support for corporate innovation. Based on a sample of listed companies from 2008 to 2021, this study employs a multi-period difference-in-differences approach to examine the impact of government-guided fund investments on sustained corporate innovation. The findings reveal that: (1) Government-guided fund investments have a significant positive effect on the continuity of corporate innovation, with a more pronounced impact on the persistence of R&D investment than on the persistence of innovation output. (2) The influence of government-guided fund investments on corporate innovation continuity exhibits heterogeneity. Specifically, the effect is significant for enterprises in eastern regions but not for those in central and western regions. Additionally, the impact is significant for state-owned enterprises, whereas for non-SOEs, it is significant only for the persistence of R&D investment but not for the persistence of innovation output. (3) Government-guided fund investments promote sustained corporate innovation through mechanisms such as cash flow, financing constraints, and equity incentives. The study proposes recommendations to further refine government-guided fund policies, leverage their supportive role in a region-specific manner, enhance the conversion capacity of corporate innovation output, and increase the degree of equity incentives.