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Accounting information quality, firm ownership and technology innovation: Evidence from China

Author

Listed:
  • Zhang, Chengrui
  • Li, Zhaohong
  • Xu, Jiaqian
  • Luo, Yiyang

Abstract

This study investigates whether and how accounting information quality (AIQ) affects innovation quality in emerging markets. Using a dataset of Chinese listed firms from 2009 to 2021, the results show that higher AIQ significantly boosts innovation, and the positive association is more pronounced for invention patents than non-invention patents. Moreover, AIQ improves the innovation efficiency of state-owned enterprises (SOE) more than non-state-owned enterprises (NSOE), whereas AIQ promotes the innovation output of NSOE more than SOE. In SOE, the governance role of AIQ contributes to greater innovation efficiency by monitoring resource allocation, while in NSOE, the implicit contracting role of AIQ motivates innovation efforts by reducing managers' career risks. Further analysis indicates that the positive relation between AIQ and innovation quality is more pronounced for firms with more severe agency conflicts and located in higher intellectual property protection regions. This research contributes to the literature on corporate governance and economic growth by identifying the different roles of AIQ in innovation across firm ownerships in the emerging market.

Suggested Citation

  • Zhang, Chengrui & Li, Zhaohong & Xu, Jiaqian & Luo, Yiyang, 2024. "Accounting information quality, firm ownership and technology innovation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924000504
    DOI: 10.1016/j.irfa.2024.103118
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    More about this item

    Keywords

    Accounting information; Firm ownership; Technological innovation; Agency conflict; Proprietary cost;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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