Institutional Investors,Financing Constraints And Corporate Innovation

"Innovation wins the future,and reform is about national games." On May 28,2018,Xi Jinping emphasized in an important speech when he attended the conference of academicians of the two academies.Since the beginning of the 21 st century,global technological innovation has entered an unprecedented intensive and active period.Enterprises are the main force of technological innovation,and technological innovation activities are frequent.The financing methods,financial market development,and policy factors of an enterprise all have varying degrees of impact on innovation activities.Among them,capital is one of the most critical input elements in enterprise innovation activities.The sources of capital for corporate innovation investment can generally be divided into internal financing and external financing.Since the capital market cannot be fully effective,information asymmetry and agency problems will cause external financing costs to be greater than internal and generate financing constraints.Financing constraints have become another prominent obstacle restricting China’s economic development.With the gradual improvement of my country’s capital market in recent years,institutional investors are gradually replacing individual investors as the backbone of my country’s financial market.Since institutional investors were allowed to enter the board of directors of listed companies in 2007,the role of institutional investors in corporate governance has been continuously highlighted,and high expectations have been placed on corporate governance.After reviewing the previous research literature on institutional investors,financing constraints and corporate innovation,this paper selects A-share listed companies in China from 2009 to 2018 as the research object,and uses the sum of securities investment funds,QFII,social security funds,securities dealers,securities brokerage financial products,insurance companies,trust companies,finance companies,and corporate annuities as the index of institutional investor holdings in this article,KZ index as a measure of financing constraints Indicators,R&D investment intensity and proportion of increment of intangible assets to total assets are used as indicators of enterprise innovation input and innovation output respectively.This paper first examines the impact of corporate investor’s overall shareholding on corporate innovation and the intermediary effect of financing constraints,and then considers the impact of institutional investor heterogeneity.Different institutional investors have different behavioral characteristics and impact on companies.The impact of innovation may also be different.According to the classification method proposed by Brickley(1988),institutional investors are classified into pressure-resistant and pressure-sensitive institutional investors.The influence of investors on corporate innovation and the intermediary effect of financing constraints.The research finds that:(1)The overall shareholding of institutional investors can significantly promote enterprise innovation input and innovation output;(2)Financing constraints play an intermediary role in the positive impact of institutional investor holdings on corporate innovation;(3)There are differences in the impact of heterogeneous institutional investors on corporate innovation.Pressure-resistant institutional investors are significantly positively correlated with corporate innovation,while pressure-sensitive institutional investors’ shareholding has no significant impact on corporate innovation.According to the research conclusions of this paper and the current situation in China,the corresponding policy recommendations are put forward.(1)Institutional investor holdings on the one hand can make the company’s information more transparent,thereby reducing the degree of information asymmetry,on the other hand,it can form an effective supervision of the agent’s behavior,reduce agency costs,thereby improving the financing constraints faced by the enterprise and promoting the enterprise Innovation is beneficial to the long-term development of the enterprise in the future.At present,the development of institutional investors in China is still immature,the shareholding ratio is not high,and there is still a large gap compared with Western developed countries.Therefore,the government not only needs to improve relevant institutional mechanisms to provide institutional investors with a good economic market environment,It should also formulate a series of policy measures to actively promote the sustained and healthy development of institutional investors.(2)Focus on developing pressure-resistant institutional investors.After testing,the pressure-resistant institutional investors represented by securities investment funds can significantly promote corporate innovation,while the pressure-sensitive type has no significant impact on corporate innovation in empirical research.Because of the difference,the government should provide assistance to the development of pressure-resistant institutional investors in the policy formulation process,and encourage them to increase their investment in the capital market.(3)From the perspective of institutional investors themselves,institutional investors are not only investors in the capital market,but also intermediaries in the capital market and transmitters and bearers of monetary policy.Institutional investors should strive to improve their professional capabilities,actively play their role in the capital market,actively participate in corporate governance and corporate decision-making,and establish scientific and effective management under the basic premise of observing laws and regulations and professional ethics.Process and decision-making system,supervise and assist the development of enterprise innovation activities and the application of innovation results,and provide multi-faceted support for enterprise innovation activities.The main contribution of this paper is: after reviewing the previous literature,it is found that in the research on the relationship between institutional investor holdings and corporate innovation,there is less in-depth analysis of how institutional investor holdings affect corporate innovation.This paper will focus on institutional investment Shareholders influence the path of corporate innovation through financing constraints.In addition,different institutional investors have different behavior characteristics,and their impact on corporate innovation may also be different.This paper examines the impact of two types of institutional investors on corporate innovation through financing constraints,enriching relevant theories,and also It can provide more specific suggestions for the use of institutional investor shares to promote corporate innovation.