The effects of green fiscal policies and R&D investment on a firm's market value: New evidence from the renewable energy industry in China

This article investigates the influences of subsidy and tax rebate policies and R&D investment on renewable energy firms' market value improvements using the generalized method of moments (GMM) to analyze firm-level panel data from the renewable energy industry in China. Our empirical evidence confirms that government subsidies and tax rebate policies result in significant inverted U-shaped relationships with market value improvements of renewable energy firms in China at the 10% significance level. In addition, greater R&D investment boosts the positive effects of subsidies, tax rebates and research and development (R&D) investment and decreases the negative effect of the subsidies and tax rebates on renewable energy firms' market value at the 10% significance level, respectively. The combined subsidy and tax rebate policies amplify the U-type impacts on the renewable energy firms' market value improvement. Moreover, location variations have significantly differentiated impacts of subsidies, tax rebates and R&D investment on the renewable energy firms' market value in the study period.(c) 2022 Elsevier Ltd. All rights reserved.

Automated summary

This article investigates the effects of subsidy, tax rebate policies, and R&D investment on the market value improvements of renewable energy firms in China. The study finds that subsidy and tax rebate policies have an inverted U-shaped relationship with market value improvements, and greater R&D investment enhances the positive effects of subsidies and tax rebates while reducing their negative effects. The combined impact of subsidy and tax rebate policies amplifies the U-shaped impact on market value improvements, and location variations also play a significant role in the effects of these policies.