The real effect of partial privatization on corporate innovation: Evidence from China's split share structure reform

Tan, Yongxian; Tian, Xuan; Zhang, Xinde; Zhao, Hailong

doi:10.1016/j.jcorpfin.2020.101661

Cited by 131 publications

(63 citation statements)

References 55 publications

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“…The result indicates that non-SOEs experience lower turnoverperformance sensitivity after the reform while SOEs do not, consistent with our argument that for SOEs, when blockholders lose their grip, government agents can step in to take control. The result is also consistent with recent studies showing that SOEs gain relatively more than non-SOEs from the reform, as indicated by their higher profitability and employment (Liao et al, 2014), higher value of excess cash (Lin et al, 2016) and more innovation (Tan et al, 2020).…”

Section: Corporate Governancesupporting

confidence: 92%

“…Even if blockholders lose their grip, government agents can step in to take control. Liao et al (2014) and Tan et al (2020) suggest the reform creates more value for SOEs than for non-SOEs because it aligns the interests of government agents and shareholders.…”

Section: Methodsmentioning

confidence: 99%

“…Previous studies mostly highlight the positive impacts of the reform on various performance and governance metrics. Those positive impacts include alleviation of financial constraints (Chen et al, 2012), reduced tunneling of corporate resources (Liu and Tian, 2012), improved firm performance (Campello et al, 2014), increased output and employment at SOEs (Liao et al, 2014), reduced foreign share discounts (Hou and Lee, 2014), more aligned interests between management and shareholders (Chen et al, 2015), the increased value of excess cash (Lin et al, 2016) and more innovation (Tan et al, 2020). Among a few exceptions, Jiang et al (2018) find that blockholders enhance corporate investment efficiency, but the SSS reform causes some blockholders to leave, and therefore, reduces the investment efficiency.…”

Section: Raf 201mentioning

confidence: 99%

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Blockholders and corporate governance: evidence from China’s split-share-structure reform

Qian

Tam

2021

RAF

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Purpose Proper empirical tests of the effect of blockholders’ monitoring incentives on corporate governance are scant in the literature because the relationship between ownership structure and enforcement of corporate governance mechanisms is bidirectional. This study aims to address the endogeneity issue by examining the effect of blockholding on executive turnover–performance sensitivity, using the split-share-structure (SSS) reform in China as an exogenous shock to blockholders’ monitoring incentives. Design/methodology/approach This study uses a logit model for estimating the change in executive turnover–performance sensitivity around the SSS reform. Sub-sample analysis is conducted to examine whether the impact of SSS reform on the turnover-performance sensitivity is stronger for firms with more contestable blockholders who might consider stock liquidity, risk sharing and diversification in their monitoring/trading decisions. Findings Top executive turnover, defined as CEO or board chair turnover, becomes less sensitive to firm operating performance after the reform, mainly for firms with contestable blockholders prior to the reform. Stock liquidity and blockholders’ demand for diversification can explain the impact of contestable blockholding. Moreover, blockholding is sensitive to firm operating performance after the reform but not before it. Originality/value With few exceptions, most studies in the blockholding literature focus on the effect of blockholder monitoring on firm value. Examining an exogenous shock to blockholding, this paper provides a set of new evidence for the impact of blockholding on executive turnover–performance sensitivity. The results call for more evidence of the impact of blockholding on executive turnover from other markets.

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Section: Corporate Governancesupporting

confidence: 92%

Section: Methodsmentioning

confidence: 99%

Section: Raf 201mentioning

confidence: 99%

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Blockholders and corporate governance: evidence from China’s split-share-structure reform

Qian

Tam

2021

RAF

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“…Following Chemmanur et al [49] and Tian et al [50], we use the logarithm of the number of patents as a proxy for innovation. Three types of patents are granted in China: invention, utility model, and design patents [51]. Invention patents are granted for a creative technical solution relating to a product or an improvement.…”

Section: Measurement Of Variablesmentioning

confidence: 99%

Rural Financial Development Impacts on Agricultural Technology Innovation: Evidence from China

Liu

Lin

et al. 2021

IJERPH

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Agricultural technology innovation is key for improving productivity, sustainability, and resilience in food production and agriculture to contribute to public health. Using panel data of 31 provinces in China from 2003 to 2015, this study examines the impact of rural financial development on agricultural technology innovation from the perspective of rural financial scale and rural finance efficiency. Furthermore, it examines how the effects of rural financial development vary in regions with different levels of marketization and economic development. The empirical results show that the development of rural finance has a significant and positive effect on the level of agricultural technology innovation. Rural finance efficiency has a significantly positive effect on innovation in regions with a low degree of marketization, while the rural financial scale has a significantly positive effect on technological innovation in regions with a high degree of marketization. Further analysis showed that improving the level of agricultural technology innovation is conducive to rural economic development. This study provides new insights into the effects of rural financial development on sustainable agricultural development from the perspective of agricultural technology innovation.

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“…It is worth noting that the SIPO database does not provide reliable information on patent citations; thus, we are unable to use patent citations to capture the quality of each patent. As pointed out by Tan, Tian, Zhan, and Zhao (), invention patents represent the most original inventions among all three types of patents; thus, the number of invention patents can also measure the quality of the patents produced by a firm.…”

Section: Sample Formation and Variable Constructionmentioning

confidence: 99%

The effects of rural–urban migration on corporate innovation: Evidence from a natural experiment in China

Chen

Gao

Luo

et al. 2019

Financial Management

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We show that the migration of low-skilled, rural workers to urban centers has a negative causal effect on innovation of firms in such urban centers. Our tests exploit the staggered relaxation of city-level household registration system in China, which facilitates rural residents to migrate to cities. We find a significant decrease in innovation for firms headquartered in cities that have adopted such policies relative to firms headquartered in cities that have not. Overall, our results support the view that an abundant supply of low-skilled workers increases the benefit of using existing low-skilled technology and thus reduces firms' incentive to innovate. K E Y W O R D Sinnovation, patents, migration, low-skilled worker, household registration, hukou

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The real effect of partial privatization on corporate innovation: Evidence from China's split share structure reform

Cited by 131 publications

References 55 publications

Blockholders and corporate governance: evidence from China’s split-share-structure reform

Blockholders and corporate governance: evidence from China’s split-share-structure reform

Rural Financial Development Impacts on Agricultural Technology Innovation: Evidence from China

The effects of rural–urban migration on corporate innovation: Evidence from a natural experiment in China

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