Financial slack, institutional shareholding and enterprise innovation investment: evidence from China

Abstract

This study examines how institutional shareholding affects the relationship between financial slack and corporate investment in innovation for Chinese Ashare listed companies. We find that financial slack significantly increases corporate innovation investment. Pressure-resistant institutions do not moderate the relation but pressure-sensitive institutions do moderate the relation negatively. We further find that financial slack affects beneficially results because of the employment of slack resources after an exogenous negative shock like COVID-19/Global Financial Crisis. Our findings contribute to the literature on the cross-sectional variation on the relationship between companies' strategies and accounting choices in China.

Executive poverty experience and innovation performance: A study of moderating effects and influencing mechanism

“…Cash holdings are measured using cash and cash equivalents scaled by total assets ( Acharya and Xu, 2017 ). Management shareholding is measured as total management shareholding divided by the total number of shares ( Zhang et al, 2021 ). Additionally, the regression model includes industry and year dummy variables, which can be used to control for the impact of industry and year ( Zhang et al, 2021 ).…”

“…Management shareholding is measured as total management shareholding divided by the total number of shares ( Zhang et al, 2021 ). Additionally, the regression model includes industry and year dummy variables, which can be used to control for the impact of industry and year ( Zhang et al, 2021 ). Table 1 presents the variable names, symbols, and definitions for all the variables.…”

Does science–industry cooperation policy enhance corporate innovation: Evidence from Chinese listed firms

“…We measure corporate innovation by using R&D expenditures as input, and minimise sample selection bias by replacing R&D expenditures with a value of zero if missing (Hirshleifer et al ., 2012). Paralleling the latest studies (Xie et al ., 2020; Helling et al ., 2020; Zhang et al ., 2020), we construct two indicators based on R&D expenditure data: the ratio of R&D expenditures to total assets ( RD_Assets ) and the ratio of R&D expenditures to revenue ( RD_Sales ). We also measure corporate innovation by the number of patent applications and construct three indicators: Patent , defined by the natural logarithm of 1 plus the total number of all patent applications; Patenti , defined by the natural logarithm of 1 plus the total number of invention patent applications; and Patentud , defined by the natural logarithm of 1 plus the total number of non‐invention patent applications, such as utility and design patent applications.…”

CEO decision horizon and corporate R&D investments: an explanation based on managerial myopia and risk aversion

“…Second, this study adds to the literature on corporate R&D investments from the upper echelons perspective. Prior studies have attributed R&D activities to institutional factors and corporate governance mechanisms such as science-industry collaboration policies (Xu et al, 2020), institutional ownership (Bena et al, 2017;Zhang et al, 2020) and internal governance factors (Xie et al, 2020). However, corporate R&D activity is also impacted by the cognition and preference of decision-makers.…”