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Does minority shareholder activism enhance corporate innovation? Evidence from China

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  • Wang, Zhibin
  • Li, Zelei

Abstract

Minority shareholder activism (MSA) on online interactive platforms is a novel form of corporate governance in China. This paper investigates whether, and how, innovation-related minority shareholder activism affects corporate innovation. We find that MSA is significantly positively related to firms’ future innovation output. We establish a causal relationship between MSA and future innovation output using both instrumental variable and propensity score matching approaches. We further find that MSA's governance effect on innovation is consistent with career concerns rather than the quiet life hypothesis. Additionally, we find that MSA's effects substitute for institutional investor activism's effects.

Suggested Citation

  • Wang, Zhibin & Li, Zelei, 2023. "Does minority shareholder activism enhance corporate innovation? Evidence from China," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001289
    DOI: 10.1016/j.frl.2023.103755
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    Cited by:

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    3. Huang, Xue & Wang, Zhibin, 2024. "Does minority shareholder activism impede corporate default risk? Evidence from China," Finance Research Letters, Elsevier, vol. 61(C).
    4. Tan, Zhuohong & Wang, Handi & Hong, Yunzhe, 2023. "Does bank FinTech improve corporate innovation?," Finance Research Letters, Elsevier, vol. 55(PA).
    5. Chen, Wenchuan & Liu, Yu & Liu, Siyi & Chen, Yugang & Zhang, Pengdong, 2024. "The governance effects of social media engagement on M&A outcomes: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    6. Wang, Maochuan & Yan, Youliang, 2023. "The dark side of investor interactive platforms: Evidence from corporate investment efficiency," Finance Research Letters, Elsevier, vol. 57(C).
    7. Han, Han & Wang, Zhibin & Zhao, Xueqing, 2023. "Minority shareholder activism, threat of exit and pay-performance sensitivity," Finance Research Letters, Elsevier, vol. 56(C).
    8. Zhao, Yang, 2024. "Retail shareholder activism and investment efficiency," International Review of Financial Analysis, Elsevier, vol. 93(C).
    9. Li, Lu & Zheng, Gaoping & Zhong, Angel, 2024. "Reforming private securities litigation in China: Does private enforcement by minority shareholders matter to corporate fraud?," Finance Research Letters, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Minority shareholder activism; Innovation; Corporate governance; Career concern;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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