Abstract
This article takes China’s A-share listed companies from 2008 to 2017 as a sample to study the relationship between industry-finance integration and corporate innovation, and discusses the differential impact of industry-finance integration on corporate innovation under different agency costs and financing constraints. In addition, in order to clarify the path that the combination of industry and finance affects corporate innovation, this article further explores the mechanism of the combination of industry and finance on corporate innovation. The study found that at this stage, the integration of domestic and domestic financing has a significant “crowding out” effect on corporate innovation, and this “crowding out” effect is even more pronounced in companies with higher agency costs and greater financing constraints. After controlling for endogeneity and performing a robustness test, the conclusion still holds. Further mechanism inspections have shown that the combination of production and finance increases the business risk of the enterprise, which in turn crowds out innovation. The above research conclusions show that at the current stage, the combination of industry and finance of listed companies in China has not effectively achieved the long-term strategic goals of the enterprise, but has increased the business risk of the enterprise, inhibited the innovation investment of the enterprise, and caused the real economy to face a situation of “depreciation to reality” threat. This article provides micro-level evidence for China’s domestic financial integration practice, and has certain reference significance for how regulatory authorities can guide the integration of industry and financial integration and how Chinese enterprises can prevent and control financial risks. The main contribution of this article is to combine the institutional background of China’s economic transformation and consider the differences between the internal and external environments facing different companies. The empirical analysis tests the relationship between the combination of industry and finance and corporate innovation. In addition, the role of this relationship is further studied from the perspective of operational risk, which provides a certain decision-making reference for Chinese enterprises on how to improve the effectiveness of the combination of industry and finance.
Highlights
As China’s economic development enters a critical transition period, how to promote industrial transformation and upgrading and promote economic development has become the key
In order to test Hypothesis 2 and Hypothesis 3, that is, to test whether the combination of industry and finance has a “crowding out” effect on corporate innovation under different financing constraints and different agency costs, this article refers to the existing research practices, according to the median of relevant variables The sample is divided into two sub-samples of high and low, and a group test is performed according to model (1) to identify the difference in the “crowding out” effect of business-finance integration on corporate innovation under different financing constraints and different agency costs
The results show that compared with companies with low financing constraints, the higher the financing constraints faced by enterprises, the more significant the “crowding out” effect of industry-finance integration on corporate innovation
Summary
As China’s economic development enters a critical transition period, how to promote industrial transformation and upgrading and promote economic development has become the key. In the critical transition period of China’s economic development, how to grasp the balance between the real economy and financial development, improve the effectiveness of the combination of industry and finance, and provide the impetus for the strategic transformation and innovation and upgrading of real enterprises is a question worthy of attention. Based on the above background, this article focuses on the relationship between China’s domestic integration and corporate innovation during the economic transformation process, attempts to deeply explore the impact of industry-finance integration on corporate innovation, and clarifies its micro-mechanism in order to provide empirical evidence for China ‘s domestic integration. The internal and external environment facing different companies may be different, and the impact of industrial-financial integration on corporate innovation may be different. In order to clarify the mechanism of industry-finance integration on enterprise innovation, this article further studies the role of industry-finance integration in corporate innovation, and provides a certain decision-making reference for how Chinese enterprises can improve the effectiveness of industry-finance integration
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