Institutional Investors’ Shareholding,Financing Constraints And Enterprise Innovation

The escalating trade friction between China and the United States,the outbreak of COVID-19,the Russia-Ukraine conflict...The Western alliance,led by the US hegemonism,has taken measures against economic globalization,which has exacerbated the uncertainty of the world economy as a whole.Since the reform and opening up,China’s economic aggregate has been rising in the global ranking,but some substantive technology patents are still in a passive position.Therefore,in recent years,China attaches great importance to the development of scientific and technological innovation,takes innovation as an important national development strategy,and always insists that innovation is the first driving force for development.As the economic subject of innovation,enterprises should have the social responsibility to respond to the call of the country and improve the level of innovation.Different from other investment activities,innovation has the typical characteristics of long cycle,high risk and high failure rate,which requires sufficient and continuous capital investment to ensure the smooth progress of R&D projects.However,long-term R&D and innovation cannot be completed only by relying on internal funds,so enterprises have to conduct external financing to obtain sufficient funds to support enterprise innovation.Therefore,enterprises are often subject to financing constraints when carrying out innovation and R&D.With the increasing maturity of the capital market,the proportion of institutional investors has been increasing year by year.Especially in the annual meeting of the Financial Street Forum in 2018,the CSRC stressed that it should continue to enrich and improve the investor structure of the stock market,vigorously develop institutional investors,and give full play to the positive role of institutional investors in corporate governance.The involvement of institutional investors alleviates the financing constraint problem caused by information asymmetry to a certain extent and promotes the progress of enterprise innovation projects and the increase of innovation output.This paper uses normative and empirical research methods to explore the relationship between institutional investors’ shareholding,financing constraints and firm innovation.By sorting out the existing literature in related research fields,this paper summarizes the theoretical basis involved in the literature,and analyzes the conclusions and limitations of the existing research.The sample data of A-share listed companies in Shanghai and Shenzhen from 2009 to 2020 are selected,and the mixed regression method is used to empirically-test the sample observations.First of all,this paper analyzes the impact of institutional investors’ overall shareholding on enterprise innovation output.Secondly,explore the mechanism of institutional investors’ shareholding on corporate innovation,and verify the intermediary effect of KZ index as a financing constraint variable.Thirdly,the model of measuring the shareholding stability of institutional investors constructed by previous scholars is introduced,and institutional investors are classified into stable and transactional types.Through empirical regression,different influences of different types of institutional investors on enterprise innovation output are obtained.At the same time,it also verifies the different roles of financing constraints in the mechanism of different types of institutional investors on corporate innovation.Fourthly,in order to further explore whether enterprise innovation is to promote high-quality development of enterprises or to meet the needs of industrial incentive policies,this paper divides enterprise innovation into breakthrough innovation and progressive innovation for empirical regression,and verifies the mediating effect of financing constraints again.Finally,by constructing an index of strategic aggressiveness,the sample data are divided into enterprises implementing exploratory strategy,defensive strategy and analytical strategy.Considering that the characteristics of analytical enterprises are not obvious,this paper only conducts group verification on exploratory and defensive enterprises to explore whether institutional investors have different influences on the innovation of enterprises implementing different strategic types.The results of this paper show that :(1)institutional investor ownership can promote the increase of enterprise innovation output.(2)Financing constraints can act as an intermediary variable between institutional investors and corporate innovation.The intervention of institutional investors can alleviate the internal and external principal-agent problems and information asymmetry,reduce the obstacles caused by financing constraints,and promote the increase of innovation output.(3)Different types of institutional investors have different influences on enterprise innovation: compared with transactional institutional investors,stable institutional investors can promote the increase of enterprise innovation output more.(4)Institutional investors have different impacts on different types of enterprise innovation:compared with progressive innovation,institutional investors are more likely to have an impact on breakthrough innovation.(5)Different strategies implemented by enterprises will have different impacts on the relationship between institutional investors’ shareholding and enterprise innovation.The shareholding of institutional investors can promote the innovation of enterprises with exploratory strategy.For enterprises with defensive strategy,the influence of institutional investor shareholding on enterprise innovation is not obvious.This study provides enlightenment for further strengthening the guidance and supervision of institutional investors.