Chinese Liquidity Of Stocks And The Ability Of R&D

After forty years of reform and opening-up,China has become the second largest economy in the world,and had maintained a strong momentum of development this years.China has been trying to improve the vitality and creativity of the country's economy,from "made in China" to "invented by China".At the meanwhile,the state emphasizes that the capital market plays a significant supplementary role in keeping the national economy growing at a high speed.In the above context,how to enhance the competitiveness of Chinese companies effect:ively and how to increase the promotion effect of the capital market to the real economy become important issues.As we can see,the ability of R&D demonstrates a company's competitiveness,while the liquidity of a stock indicates a large amount of information of capital market.Whether there are some potential relationships and interactions between these two characteristics is getting a lot of attention.This paper selects 508 listed companies with relatively higher demand for patents in five industries from year 2011 to 2016,and does empirical analyses by using Pooled OLS model and Difference-in-Difference model.After analyzing the panel data in Pooled OLS model,the paper finds that there is a positive correlation between stock liquidity and enterprise innovation,and this relationship is more significant as the increase of lagged periods.Taking the stock market crash in 2015 as an exogenous shock event,this paper analyzes the causality between the two by Propensity Score Matching method and Difference-in-Differences model.Moreover,further model tests are made according to the classification of industries and markets.It is found that different industries and markets exhibit different characteristics in stock liquidity.Base on existing researches,this paper improves the selection of sample firms and proposes further exploration ideas in view of some remaining shortcomings.Besides,corresponding policy recommendations are also made in order to contribute to the development of Chinese stock market and real economy.Many drawbacks still exist in this paper and are awaiting further researches by scholars.