R&D subsidy, non-R&D subsidy and institutional investors' subscription for private placement of new shares: Evidence from China's securities market

Based on the data of listed companies in Shanghai and Shenzhen that have implemented private equity placements (PEP) from 2007 to 2020, we examine the impact of different types of government subsidies on institutional investors' participation in PEPs. We found that, first, the more government R&D subsidies obtained by companies issuing PEP, the greater the proportion of strategic investors’ subscriptions, with corporate R&D investment playing an intermediary role. Second, the participation of strategic investors in PEPs can effectively contribute to the positive impact of R&D subsidies on firms' innovation output, while the participation of financial investors doesn’t. This study reveals the heterogeneity of the information transfer effects of government subsidies and the investment preferences of institutional investors. Our research provides empirical evidence for the authority to improve the government subsidy policy and PEP system, and provide a referenced theoretical basis for institutional investors who intend to participate in PEPs.