Abstract:     Innovation lies at the core of China′s modernization drive, and high-investment, high-risk, and long-cycle innovation activities require precise policy interventions as well as synergistic effects among different policies. However, research on the policy synergies remains limited. This paper developed a dynamic firm value model that integrates both additional deduction and accelerated depreciation policies, theoretically deriving how fixed asset investment amplifies the effectiveness of additional deduction incentives. As the first study to systematically examine this issue, we captured the synergistic effects of this policy mix on corporate innovation activities. Using a comprehensive dataset of Chinese A-share listed firms from 2009 to 2018, we empirically tested these theoretical predictions. The results showed that both policies individually and significantly promote corporate R&D investment, and the mix of the two further enhances R&D investment, revealing substantial synergistic gains. Moreover, the policy mix exhibits heterogeneous effects on firms′ expensed and capitalized R&D expenditures, with a more pronounced impact on the former. The Mechanism analysis further revealed that these synergistic effects are primarily realized through three channels: cash flow amplification, R&D equipment superposition, and R&D personnel complementarity. The heterogeneity analysis demonstrated that the synergistic gains are more pronounced in firms with high income tax burdens, high-tax industries, and growth-stage enterprises, as well as in firms operating in highly competitive industries or regions with higher marketization levels. Additionally, the policy mix significantly improves firms′ R&D output without sacrificing other factor inputs. This study has provided a theoretical foundation for policymakers to optimize policy design and promote policy coordination, thus helping to reduce policy uncertainty, avoid the fallacy of composition, and better achieve the strategic goals of innovation-driven development.

Key words: tax incentive policy mix, synergistic dividend, R&D investment, additional deduction, accelerated depreciation