Equity Pledges, Financing Constraints and Corporate Technological Innovation: Evidence from Chinese A-Share Listed Companies

Guanchi Tong (), Ningman Yang () and Yanli Zhou ()
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Guanchi Tong: Zhongnan University of Economics and Law, School of Finance
Ningman Yang: Zhongnan University of Economics and Law, School of Finance
Yanli Zhou: Zhongnan University of Economics and Law, School of Finance

A chapter in Proceedings of the 2024 6th Management Science Informatization and Economic Innovation Development Conference (MSIEID 2024), 2025, pp 168-186 from Springer

Abstract: Abstract This study examines the impact of equity pledging on corporate technological innovation input and output by incorporating financing constraints, using all A-share listed companies in China from 2011 to 2023 as samples. We reveals that the equity pledging behavior of controlling shareholders facilitates corporate technological innovation in terms of both input and output. However, an increase in the proportion of equity pledging by controlling shareholders significantly inhibits corporate technological innovation input. Financing constraints exert an inhibitory effect on both corporate technological innovation input and output. Further examination indicates that in firms with a higher degree of financialization, the promotional effect of equity pledging on technological innovation input is more pronounced. In contrast, within companies where controlling shareholders hold a lower proportion of shares, the inhibitory effect of financing constraints on technological innovation output is more significant. Moreover, by examining the moderating effect of CEO duality with equity pledge and financing constraints, we found CEO duality mitigates the inhibiting effect of financing constraints on corporate technological innovation and intensifies the extent and direction of the original impact of equity pledge ratios.

Keywords: Corporate technological innovation; Equity pledges; Financing constraints; CEO duality (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-676-5_19

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