Summary:
The stock markets have played a key role in China's economic development. In 2021, the total operating income of the companies listed on the Shanghai and Shenzhen Stock Exchanges was more than half the value of China's GDP. An increase in the number of listed companies is an important sign of stock market development and an indicator of economic development. Corporate innovation is an important part of national innovation and drives economic development. The unlisted companies in China are small and medium-sized enterprises, which contribute more than 70% of the country's technological innovation and are an important source of employment and social stability. It is important to examine the effect of the number of listed companies on the innovation of unlisted companies to understand the determinants of corporate innovation in China. There are two channels through which an increasing number of listed companies affect the innovation of unlisted companies. First, the information disclosed by listed companies reduces the information asymmetry between external investors, creditors (including banks) and related unlisted companies. Hence, unlisted companies in the same industry or region find it easier to raise funds to support their innovation activities. Second, the information disclosed by listed companies helps unlisted companies in the same industry or region to clarify the direction of their innovation activities and regional policy support, thereby reducing the uncertainty in innovation activities and promoting innovation by unlisted companies. Using data from the Industrial Enterprise Database, we investigate the effect of the number of listed companies on the innovation of unlisted companies and find that unlisted companies increase their innovation as the number of listed companies increases. This positive relationship is stronger for unlisted companies with more serious financial constraints than for those with fewer financial constraints. The innovation activities of listed companies enhance this effect through knowledge dissemination. Furthermore, analysts' following and high-quality auditing improve the quality of information disclosure of listed companies and enhance the effect even more. Further evidence shows that college graduates strengthen the positive relationship by providing more regional labor. Regional marketization promotes regional R&D spillover effects, and financial marketization helps unlisted companies obtain more external financing. Therefore, a higher degree of regional and financial marketization strengthen the positive relationship. These results are robust to different specifications. This study contributes to the literature in the following aspects. First, this study enriches research on the spillover effect of the number of listed companies on unlisted companies. The literature has investigated the impact of the number of listed companies on macroeconomic growth and on the investment and entrepreneurship of unlisted companies at the microeconomic level. Our study further investigates the effect of the number of listed companies on the innovation of unlisted companies. Although Matray (2021) studied the impact of the innovation of listed companies on the innovation of unlisted companies, this study addresses the effects of both the innovation activities of listed companies and, in particular, the number of listed companies on the innovation of unlisted companies by reducing financing constraints. Therefore, this study extends the research on the impact of listed companies on the innovation of unlisted companies. Second, this study adds to the literature on the impact of market forces on the innovation of unlisted companies. Studies have focused on the impact of government policies, such as tax policies, government procurement policies, industrial supporting policies and government subsidies, on the innovation of unlisted companies. However, this study examines the influence of market forces (stock market development) on the innovation of unlisted companies. The literature explores market forces, such as market concentration, market competition and industrial agglomeration, that influence the innovation of unlisted companies. Our study focuses on the influence of stock market development (i.e., increase in the number of listed companies) on the innovation of unlisted companies to enrich our understanding of these effects of market forces.
李孟哲, 麻志明, 吴联生. 上市公司数量与非上市公司创新[J]. 金融研究, 2022, 509(11): 171-188.
LI Mengzhe, MA Zhiming, WU Liansheng. Effect of the Number of Listed Companies on Unlisted Companies' Innovation. Journal of Financial Research, 2022, 509(11): 171-188.
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