SD Policy, Political Connection and R & D Expense: Firm-Level Evidence from China

This paper aims to answer whether super deduction of R & D expense policy (SD policy), a preferential tax policy, effectively stimulates firm’s in the first place and is affected by political connections second. By theoretically exploring how SD connection influence behaviour, then empirically examines effects using firm-level data China. Results show that firms’ significantly, which was, however, mitigated connections. Besides, types CEO have heterogeneous on policy-R nexus way CEOs with CPC NPC backgrounds promotive effect but are statistically insignificant. In contrast, government CPPCC an inhibitive effect.