Investor Attention and Corporate Innovation Performance: Evidence from Web Search Volume Index of Chinese Listed Companies

Nian Li, Chunling Li, Runsen Yuan, Muhammad Asif Khan, Xiaoran Sun and Nosherwan Khaliq
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Nian Li: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
Chunling Li: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
Runsen Yuan: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
Muhammad Asif Khan: Department of Commerce, Faculty of Management Sciences, University of Kotli, Azad Jammu and Kashmir, Kotli 11100, Pakistan
Xiaoran Sun: Business School, University of Leeds, Leeds LS2 9JT, UK
Nosherwan Khaliq: School of Economics and Management, Yanshan University, Qinhuangdao 066004, China

Mathematics, 2021, vol. 9, issue 9, 1-23

Abstract: Leveraging from the online search index of Chinese listed companies from 2012 to 2018, we empirically test the relationship between investors’ attention and corporate innovation performance for the first time. The main results are as follows: (1) investors’ attention significantly improves listed companies’ innovation performance, which is reflected in the increase of patent applications. This indicates that investors’ active information collection behaviour affects China’s economic development by promoting enterprise innovation. (2) This paper’s conclusion remains intact after a battery of robustness checks, such as alternative measures of key variables and empirical specifications and a series of endogenous treatment. (3) The mechanisms tests show that: “information asymmetry”, “financing constraint”, and “agency cost” are supported. In other words, with the increase of investors’ attention, not only the information asymmetry is reduced, which greatly improved the information environment of the capital market, but also the external financing constraints of enterprises are alleviated. The opportunistic management behaviour is effectively suppressed, thus motivating the corporate innovation incentives and improving the corporate innovation of input, output and quality. (4) Further research shows that investor attention to listed companies also improves the efficiency of capital allocation. This paper’s conclusion shows that investors’ initiative information acquisition behaviour can improve enterprises innovation performance, thus providing a driving force for China’s economic development.

Keywords: innovation; investor attention; information disclosure quality; financing constraints (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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