Abstract
Leveraging from the online search index of Chinese listed companies from 2012 to 2018, we empirically test the relationship between investors’ attention and corporate innovation performance for the first time. The main results are as follows: (1) investors’ attention significantly improves listed companies’ innovation performance, which is reflected in the increase of patent applications. This indicates that investors’ active information collection behaviour affects China’s economic development by promoting enterprise innovation. (2) This paper’s conclusion remains intact after a battery of robustness checks, such as alternative measures of key variables and empirical specifications and a series of endogenous treatment. (3) The mechanisms tests show that: “information asymmetry”, “financing constraint”, and “agency cost” are supported. In other words, with the increase of investors’ attention, not only the information asymmetry is reduced, which greatly improved the information environment of the capital market, but also the external financing constraints of enterprises are alleviated. The opportunistic management behaviour is effectively suppressed, thus motivating the corporate innovation incentives and improving the corporate innovation of input, output and quality. (4) Further research shows that investor attention to listed companies also improves the efficiency of capital allocation. This paper’s conclusion shows that investors’ initiative information acquisition behaviour can improve enterprises innovation performance, thus providing a driving force for China’s economic development.
Highlights
External investors may reduce the degree of information asymmetry, ease enterprises’ financing constraints, supervise the opportunistic behaviour of management, and stimulate enterprises’ innovation motivation, thereby increasing innovation output
It takes a certain amount of time due to the impact of investor attention on enterprise innovation output, the independent variable has already been lagged for a period to effectively alleviate the endogenous problem caused by reverse causality [66] by following Chen et al (2016) [103], Adhikari and Agrawal (2016) [104]
(1976) [108] and Jiang and Yuan (2018) [7], investors play an important role in improving the capital market information environment [28,29] and promoting corporate innovation
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. A large number of studies have shown that agency problems [18,19] and financing constraints [20,21,22] are the key factors that distort managers’ decisions and lead corporates to deviate from the optimal innovation level [23] By actively increasing their attention to listed companies, investors can help alleviate the degree of information asymmetry with companies, supervise managers’ opportunistic behaviours, and alleviate corporate financing constraints, thereby affect corporate innovation activities and the development of the real economy. Blankespoor et al (2014) [31] pointed out that IT companies’ use of Twitter can reduce information asymmetry in the stock market In response to these studies, this article reveals the influence of Internet technology development on corporate innovation and its internal mechanism. The paper’s structure is as follows: the second part is a literature review and research hypothesis; the third part is research design; the fourth part is empirical results; the fifth part is a conclusion
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