The effects of Tech‐Fin on corporate innovation: Evidence from China

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Abstract

This paper uses the multi-period difference-in-differences (DID) method to empirically test the effects of Tech-Fin on the innovation output of companies based on a quasi-natural experiment to examine China's Tech-Fin pilot city reform. We find that Tech-Fin significantly increased the innovation output of high-tech companies in the pilot cities and in cities with weak intellectual property protection. In addition, Tech-Fin had no significant effects on the innovation output of pseudo-high-tech companies and technology-intensive high-tech companies. We further find that Tech-Fin motivated high-tech companies to increase their innovation output through innovation correction and risk-smoothing effects.

Minority state ownership and firm performance: Evidence from the Chinese stock market crash in 2015

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Abstract

We examine the effect of minority state ownership on firm performance using the Chinese stock market crash in 2015. We find that treatment firms with minority state ownership accumulated from governmental purchases of equities experience significant reductions in operating performance. The negative impact is more severe in firms with higher riskiness and firms with less powerful large shareholders. We also find that treatment firms’ risk decreases and their employment increases after minority state shareholders step in, providing supportive evidence on the government's motives of reducing risk and preventing mass layoffs. Further tests reveal the channels through which minority state ownership impedes investment efficiency, productivity, and innovation. The negative impact diminishes when government institutions divest their shares in a timely manner. Overall, our results suggest there are unintended negative consequences of minority state ownership arising from the governmental rescue package in a market crisis.