Overseas residency rights of Chinese listed firms' controllers: Impacts on R&D and public welfare donations.

Abstract

By developing an intertemporal decision-making model, this paper investigates the impact of the acquisition of overseas residency by a firm's beneficial owner on the firm's intertemporal decision-making. By incorporating a discount rate in the model, the paper finds that obtaining foreign residency alters the temporal distributional characteristics of the utility of the beneficial owner, weakening its preference for intertemporal investment behaviors such as R&D and donations. We then conduct an empirical analysis using the propensity score matching method for Chinese listed firms. The results show that firms with overseas residency have significantly lower R&D investment and an increase in philanthropic donation intensity than other firms. This study provides some practical benefit and relevance to government public policymaking: for developing countries such as China, public policies that take into account incentive compatibility will be more conducive to R&D investments and charitable donations by companies that obtain overseas residency rights, thus enhancing their brand value and social well-being.