The impact of R&D subsidies on firm innovation in different supervision situations: analysis from pharmaceutical companies in China

New inventions can increase productivity, accelerate the creation of new profits, and provide lucrative growth potential. Using a fixed effect model, this article examines the influence of government innovation subsidies and tax rebates on the R&D production of pharmaceutical companies from 2010 to 2020. It also assesses the moderators of institutional investors, audit agencies, and public opinion in monitoring. The research finds that government innovation subsidies and tax rebates have a significant impact on pharmaceutical enterprises' R&D outputs. Second, institutional shareholding and public opinion supervision can increase government innovation subsidies and tax breaks for pharmaceutical R&D. SOEs are more susceptible to innovation subsidies, while non-SOEs benefit from tax rebates. This study assists managers and policymakers develop effective innovation strategies.