Policy Uncertainty, Financialization and Enterprise Technological Innovation: A Way Forward Towards Economic Development

Abstract

Technological innovation is the core factor for enterprises to maintain competitiveness. This paper aims to investigate how policy uncertainty affect enterprises’ innovation. On the basis of theoretical analysis, this study selects data from 2008–2017- and a share of non-financial listed companies as the research sample. Using patent data of listed companies and China’s economic policy uncertainty (EPU) index, the study examines the impact of EPU on enterprise innovation. In addition, the regulatory effect of enterprise financialization has been investigated. The results show that the EPU can promote the quantity growth of enterprise innovation but inhibit the improvement of enterprise innovation quality. The impact of EPU on enterprise innovation will be affected by enterprise ownership, financing constraint level, life cycle, regional administrative level and regional economic level. Furthermore, enterprise financialization shows a negative regulatory effect in the process of EPU affecting enterprise innovation. This study provides policy enlightenment for reasonably formulating economic policies and promoting enterprise financialization, so as to effectively improve enterprise innovation ability and economic development.

Low carbon cities pilot, executive environmental cognition, and enterprise green technology innovation

“…It has been confirmed by some scholars that weakening economic policy uncertainty brings about the reduction of operating costs and business risks and thus facilitates the progressive growth of businesses through fostering innovation (Lou et al, 2022). Low‐carbon economic transformation requires enterprises to take the road of green transformation, which provides predictable economic rules for enterprise technological innovation and greatly reduces enterprise economic policy uncertainty (Zhang et al, 2023). From this, we conclude that the LCCP promotes EGTI by weakening economic policy uncertainty.…”

The Impact of Environmental Tax Reform on Total Factor Productivity of Heavy-Polluting Firms Based on a Dual Perspective of Technological Innovation and Capital Allocation

“…In addition, the nature of property rights will lead to the differentiation of R&D investment among enterprises. In the high intensity environmental regulation, some enterprises tend to passively pay the environmental protection tax, while other enterprises tend to upgrade the technology [37]. State-owned enterprises are superior to non-state-owned enterprises in management, supervision and control and technological innovation.…”

Can Green Mergers and Acquisitions Curb the Financialization of Heavily Polluting Enterprises? Evidence From China

“…More vividly, the precautionary nature of financial assets is like a cistern, storing water when the rains are plentiful and allowing for emergencies when the weather is dry. For business operations, investing in financial assets when the enterprise has sufficient funds, which can not only increase the liquidity of the assets, but also improve enterprise profits [75]. On the contrary, the sale of financial assets when the enterprise has financial difficulties can not only supplement the enterprise's cash flow, but also can help the enterprise out of the financial crisis as soon as possible [1,76].…”

“…On the other hand, rising returns on financial investments will also drive corporate financialization [8]. Chinese enterprises always seem to make better returns on their financial investments [75], a situation that has attracted more enterprises to join the financial investment camp [2]. Enterprises are inevitably influenced by capital for profit to make financial investments [82].…”