Executive shareholding, institutional investor shareholding and enterprise innovation

Abstract

PurposeThe purpose of this study is to empirically investigate the relationship between executive shareholding, institutional investor shareholding and corporate innovation, and to further explore in depth the impact of executive shareholding on corporate innovation under different industries.Design/methodology/approachThis paper uses the panel data of A-share listed companies in Shanghai and Shenzhen from 2012 to 2020 as the research sample to empirically study the relationship between executive shareholding, institutional investor shareholding and corporate innovation based on multiple linear regression models and panel fixed effects.FindingsThe research shows that: on the whole, the impact of executive shareholding on enterprise innovation presents an inverted “U” shape; institutional investors will negatively regulate the impact of executive shareholding on enterprise innovation; the impact of executive shareholding on enterprise innovation will show obvious industry differences in different industries.Research limitations/implicationsThe empirical results not only enrich the research on the effects of institutional investors' involvement in corporate governance practice, but also provide targeted experience for promoting enterprise innovation. Due to the limitations of innovation indicators and industry sample selection, it is necessary to be cautious when extending the results to other fields.Practical implicationsEnterprises should fully consider the impact of executive shareholding on innovation and formulate a scientific executive incentive system according to the differences of their industries. The government should be aware of the important role of institutional investors in enterprises, improve the channels and ways for institutional investors to participate in corporate governance, and improve the basic system of capital markets.Originality/valueOn the one hand, this paper empirically tests the regulatory role of institutional investors' shareholding and the relationship between executive shareholding and enterprise innovation, which enriches the research on the effect of institutional investors' involvement in corporate governance practice. On the other hand, the research by industry is more targeted to provide experience for promoting enterprise innovation.

Corporate ESG Performance and Shareholding Preference of Institutional Investors

“…(1998) [25]divided institutional investors into pressure-sensitive and pressure-resistant types. Pressureresistant institutional investors do not have business contacts with enterprises, so they can maintain strong independence and pay more attention to the long-term investment value and development potential of listed companies (Jiang Tao, 2022) [26].Stress resistant investors focus on long-term shareholding of enterprises and have more obvious reactions to ESG related information disclosure of invested enterprises. Therefore, compared with stress-sensitive institutional investors, stress-resistant investors prefer ESG with longterm returns.…”

Institutional investor shareholdings and corporate financialization behavior

“…Among the diverse institutional investors, autonomous institutional investors can considerably boost the innovation ability of listed companies, but non-independent ones have no significant effect; the effect of the investment ratio of institutional investors differs according to the nature of the corporate entities; the rise in the shareholding ratio of organizational investors can substantially promote the innovation investment and the number of patents granted by private companies, but has no significant effect on the R&D investment and the number of patents granted by state-owned listed companies. Diverse institutional investors have varying influence on the quality of innovation in publicly traded companies, with independent institutional investors promoting radical innovation and inhibiting incremental innovation, while non-independent institutional investors only promote incremental innovation; financing constraints play a part in the influence of institutional investors as a whole and independent institutional investor on the innovation capability of enterprises [10].…”

Qualified foreign institutional investors and corporate innovation: From the perspective of corporate governance

“…find that foreign strategic investors can help improve the executive compensation mechanism and encourage managers to improve corporate governance by increasing the performance sensitivity of managers' compensation. Wang and Cheng (2022) believed that the impact of executive stock ownership on corporate innovation presented an inverted "U" shape; Institutional investors will negatively regulate the impact of executive shareholding on corporate innovation. Li et al (2018a,b) find that QFII provide listed companies with a special and professional supervision force from abroad, which can enhance the quality of companies' information disclosure.…”