 Executive financial literacy and firm innovation in ChinaGuangning Tian, Shuyuan Zhou and Sara Hsu Pacific-Basin Finance Journal, 2020, vol. 62, issue C Abstract: Based on data collected from original surveys on China's small and medium-sized enterprises, this paper examines the relationship between executive financial literacy and firm innovation from both theoretical and empirical perspectives. We design a theoretical model of executive financial literacy and firm innovation. After controlling for individual and firm variables, we find that the executive financial literacy can significantly improve firm innovation. We use an instrumental variable approach to overcome potential endogeneity issues associated with executive financial literacy. We find that the conclusion above is robust and reliable. Executive financial literacy has a more significant impact on firms with low leverage ratios and firms lacking a chairman with experience as a deputy to the People's Congress. The results show that executive financial literacy can promote firm innovation by alleviating financing constraints and improving risk management. The paper provides policy implications for stimulating the innovation and creativity of firms as well as the whole society. Keywords: Financial literacy; Executive characteristics; Firm innovation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:62:y:2020:i:c:s0927538x20300810 DOI: 10.1016/j.pacfin.2020.101348 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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