State capital involvement, managerial sentiment and firm innovation performance Evidence from China

TL;DR

This study examines how state capital involvement influences innovation in Chinese firms, highlighting the roles of managerial sentiment and financing constraints in mediating and moderating this relationship.

Contribution

It uncovers the mechanisms by which state capital intervention affects innovation, emphasizing managerial sentiment and financing constraints as key factors.

Findings

State capital intervention boosts innovation performance via managerial sentiment.

Financing constraints moderate the impact of state intervention on innovation.

The study uses data from Chinese listed firms between 2010 and 2020.

Abstract

In recent years, more and more state-owned enterprises (SOEs) have been embedded in the restructuring and governance of private enterprises through equity participation, providing a more advantageous environment for private enterprises in financing and innovation. However, there is a lack of knowledge about the underlying mechanisms of SOE intervention on corporate innovation performance. Hence, in this study, we investigated the association of state capital intervention with innovation performance, meanwhile further investigated the potential mediating and moderating role of managerial sentiment and financing constraints, respectively, using all listed non-ST firms from 2010 to 2020 as the sample. The results revealed two main findings: 1) state capital intervention would increase innovation performance through managerial sentiment; 2) financing constraints would moderate the effect of state capital intervention on firms' innovation performance.