Do Government Subsidies and Regional Dispersion Influence the Relationship Between Energy Transition and R&D in financial performance? Evidence From Brazilian Companies in the Energy Sector

Objective: The objective of this study is to analyze the relationship between R&D expenditures, investments in energy transition, tax incentives and location on the financial performance of the Brazilian energy sector. Theoretical Framework: The energy transition in Brazil is impacted by the high cost of renewable sources, intermittency in energy generation and the need for investments in R&D. Although government subsidies encourage innovation, they can replace private investments, reducing their effectiveness in the long term. Regional heterogeneity also influences the allocation of incentives, which can create additional barriers for companies in less developed regions. Method: The research used panel data regression to analyze 58 companies in the Brazilian energy sector between 2010 and 2022. Financial data were extracted from statements published in the CVM and tax incentives from ANEEL publications. Results and Discussion: The results indicate that investments in energy transition influence financial performance, while R&D did not demonstrate statistical significance. Tax incentives showed a positive relationship with performance. Firms in less developed regions benefited from tax incentives when investing in innovation, reinforcing the importance of the interaction between subsidies and regional expansion. Research Implications: The findings provide policy insights, indicating that well-targeted incentives can boost innovation and competitiveness. Regional influence highlights the need for specific strategies to foster sustainable development. Originality/Value: This study contributes by exploring the interaction between subsidies, innovation and financial performance in the energy sector, helping managers formulate strategies for the energy transition.