Research On Innovation Decision-making Factors Of Chinese Listed Firms

As China’s economy enters a phase of high-quality development,the role of innovation in economic growth and corporate development has received increasing attention.As a foundation for the survival and development of enterprises in the capital market,resources and information play important roles in corporate innovation.Abundant resources are the basic material conditions supporting innovation.Effective information can reduce the risk of innovation and increase the probability of success.Against the above background and considering information and resources as the starting point,this dissertation focuses on the impacts of academic independent directors,vertical interlock executives,and regional peer effects on corporate innovation decisions.The research contents of this dissertation are as follows.The first part of this dissertation examines the effects of academic independent directors’ abnormal resignations on a firm’s R&D investment.According to the “top echelon theory”,the top management team becomes an important player in corporate decisions.The top management team consists of the makers and executors of corporate strategy.Their abilities and characteristics determine the information management and resource allocation for innovation.Many independent directors of listed firms come from academic research institutions,such as colleges and scientific research institutions.Compared with other independent directors,academic independent directors have the unique advantages of higher knowledge endowment and wider academic networks,which can contribute to innovation activities.This section manually collects the resignation data from 3,964 academic independent directors(IDAs)and finds that the abnormal resignations of IDAs reduce firms’ R&D investment.The results remain significant after employing a series of endogenous checks and robustness tests.Furthermore,this study finds that the lack of advising and resourcing channels caused by abnormal resignations are the primary mechanisms for the decline of R&D investment.The main finding is more pronounced for non-state-owned enterprises,firms with numerous independent directors,and firms with high profitability and low degrees of financial constraints.This section contributes to the literature by proving that the abnormal resignations of IDAs not only decrease firms’ R&D investment but also further reduce the innovation quality and firm value over the long run.Overall,this dissertation supports the idea that IDAs make positive contributions to R&D investment and firms’ value.The second part analyzes the resumes of the executive teams of listed firms using text analysis techniques.Based on their work experience,this dissertation sorts out senior executives who are closely related to the controlling shareholder,named vertical interlock.It examines the impact of vertical interlock on the firm value of listed firms in China.Prior studies have tended to focus on board interlock in mature markets.Few studies have examined the control of R&D resources by the major shareholders in emerging markets through vertical interlock.The results of this section show that vertical interlock significantly reduces firm value.Importantly,this section finds that the vertical interlock executives exacerbate the “second type of agency problem” and create a “tunneling effect” that reduces R&D investment in listed firms.The analysis of executive vertical correlation on innovation performance finds that independent R&D patents,invention and utility patents have a greater negative impact.The decline in R&D investment has further weakened the ability of firms to innovate,in turn having a negative impact on firm value.Furthermore,the negative effects are more pronounced when the type of vertical interlock is indirect,and the interlocking position is the board chair.The results support the notion that vertical interlock appears to worsen corporate governance.In the third part,this dissertation examines whether local neighbors operating in different industries affect firms’ innovation engagement,which is defined as the regional peer effects on corporate innovation.Most of the existing studies of the factors influencing corporate innovation have been based on the assumption of independent decisions.However,peer effects are important because a small initiation by an individual firm can create enormous changes in peer firms’ actions.Similar to firms in the same industry,firms in the same region are also important reference objects for decision making.Considering the information interaction between corporate innovations,this dissertation studies the regional peer effects in corporate innovation based on the “peer effects theory”.This dissertation finds that local neighbors can serve as a positive reference group for other local firms operating in very different industries,in turn facilitating the generation of regional peer effects in corporate innovation.The regional peer effects are more salient when regional peers are proxied by “good neighbors”,measured using Tobin’s Q.The results remain robust after controlling for endogeneity using multiple approaches,controlling for possible comovements of corporate innovation,and addressing unobservable regional factors.Importantly,this study finds that the spread of innovative spirit via information transmission among local executives and regional vibrancy are the mechanisms that boost corporate innovation.The study provides a valid mechanism to explain the emergence of highly innovative cities without a specific industry agglomeration.This dissertation clarifies how the top management team influences corporate innovation performance through information and resource channels.This study further expands the assumption of independent decision making regarding corporate innovation.Considering the mutual influence among firms’ innovation decisions,this dissertation focuses on the regional peer effects of innovation driven by interregional information interactions among executives.The conclusions of this dissertation provide a new perspective for corporate executives to allocate resources and integrate information to enhance innovation capabilities and provide insights for listed firms to form more efficient management teams.This dissertation also helps to promote the development of regional innovation in China and the implementation of the national innovation-driven development strategy.