Author(s)

Xiuting Wang, Junhui Yu, Yuhan Jiang

Corresponding Author

Xiuting Wang

ABSTRACT

In recent years, innovation capability has become a core element for companies to maintain sustainable competition. This paper empirically analyzes the relationship between foreign shareholding and the innovation ability of listed companies and its mechanism of action, taking the A-share listed companies in Shanghai and Shenzhen from 2011 to 2020 as the sample. The findings: (1) Foreign equity ownership promotes innovation. The findings remain robust after transforming the Tobit model and testing the laggedness. (2) Foreign equity ownership enhances firms' innovation capability by alleviating firms' financing constraints. (3) Further study finds that the promotion effect of foreign shareholding on corporate innovation is more significant in firms with lower executive shareholding and lower audit quality; the study in this paper suggests that foreign shareholding plays an important role in improving the innovation capability of listed firms and enriches the research on the effect of foreign shareholding. This paper reveals the intrinsic ways and influencing factors of foreign shareholding to improve the innovation ability of enterprises through corporate governance, and provides theoretical evidence for the government to formulate and improve relevant laws and regulations and deepen the opening of capital market.

KEYWORDS

Foreign shareholding, Corporate governance, Corporate innovation