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Multiple large shareholders, agency problem, and firm innovation

Author

Listed:
  • Chen Li
  • Caiyu Yan
  • Juan Li
  • Chuanwen Xia
  • Yigui Xiao
  • Ling Zheng

Abstract

This paper, in the context of agency problem, examines the impacts of multiple large shareholders on firm innovation. A dataset of non‐financial listed firms in China was established from 2007 to 2019. Innovation is divided into innovative quantity and innovative quality. The results demonstrate that multiple large shareholders can trigger innovative quantity and improve innovative quality. Multiple large shareholders restrict excessive earnings management and optimize pay gap by top manager to support innovation. It also finds that multiple large shareholders have a positive impact on firm's innovation through reducing share pledge and tunneling action of controlling shareholders. Moreover, it is also confirmed that better information environment and legal framework contribute to the positive effect of multiple large shareholders in corporate governance, along with firm innovation superior.

Suggested Citation

  • Chen Li & Caiyu Yan & Juan Li & Chuanwen Xia & Yigui Xiao & Ling Zheng, 2024. "Multiple large shareholders, agency problem, and firm innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(2), pages 734-747, March.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:2:p:734-747
    DOI: 10.1002/mde.4032
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    Cited by:

    1. Junping Zhang & Ping Li, 2024. "Share pledging: Measuring margin call pressure and its influence on liquidity commonality," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(6), pages 3897-3914, September.

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