Government intervention and firm innovation outputs: a heterogeneity of corporate governance of Chinese listed firms

ABSTRACT

Using twelve years data (2008–2019) of listed firms in high-end equipment manufacturing industry (HEMI), this study evaluates the impact of China’s high-and new-technology enterprise (HNTE) programme on firm innovation. It finds that HNTE certification boosts the number and growth rate of firms’ innovation outputs, and such effect is affected by corporate governance environment. Our findings reveal the effectiveness of government intervention in innovation under diverse corporate internal governance conditions.

KEYWORDS:

• HNTE certification
• innovation outputs
• equity incentive system
• CEO and chairman duality
• regional convergence of independent directors

JEL CLASSIFICATION:

• O32
• O38
• L29
• L52

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ According to the Guidance Catalogue of Key Products and Services for Strategic Emerging Industries released by China’s National Development and Reform Commission, HEMI mainly includes aviation equipment industry, satellite and application industry, rail transit industry, ocean engineering equipment industry and intelligent manufacturing equipment industry.

² I also collected the data in 2007 to calculate the growth rate of innovation output.

³ One-to-one matching approach was adopted (caliper width 0.05).

⁴ Es, Ds and Ss are dummy variables that take 1 if the stock is held and 0 otherwise. CCD is also a dummy variable that takes 1 if the chairman does not concurrently hold the CEO role and 0 otherwise.

⁵ Regional convergence of independent directors refers to whether all independent directors are in the place where the firm operates. If so, the value is 0; if not, the value is 1.

Additional information

Funding

This work was supported by the Humanities and Social Sciences Program of Ministry of Education of China (18YJA630007) and Soft Science Research Program of Shanxi Province (2021KRM190).