The Effectiveness and efficiency of corporate innovation under strict market regulation: Based on China’s new securities law
Zhenna Huang
TL;DR
China's new securities law boosts corporate innovation effectiveness and efficiency by easing financing constraints and improving governance.
Contribution
Empirically demonstrates the impact of China’s new securities law on corporate innovation using a quasi-natural experiment and DID method.
Findings
NSL significantly improves corporate innovation effectiveness and efficiency.
Financing constraints and governance improvements mediate the NSL’s positive effects.
Poor corporate governance limits the NSL’s benefits for innovation.
Abstract
The revision of the new securities law (NSL) represents a market-oriented reform of China’s securities market centred on the registration-based system. On the basis of data from all A-share listed companies in China from 2015 to 2022, this study employs the NSL as a quasinatural experiment and uses the difference-in-differences (DID) method to evaluate the impact of NSL implementation on the effectiveness and efficiency of corporate innovation. The empirical results indicate that the implementation of the NSL has a significant positive effect on both the effectiveness and efficiency of corporate innovation. This conclusion remains robust after supplementary tests, such as changing the regression method, replacing the dependent variables, excluding municipalities directly under the central government, and accounting for the impact of the pandemic, are conducted. The mediation effect…
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Taxonomy
TopicsCorporate Finance and Governance · Firm Innovation and Growth · Private Equity and Venture Capital