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

In: Proceedings of the 2024 6th Management Science Informatization and Economic Innovation Development Conference (MSIEID 2024)

Author

Listed:
  • 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)

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.

Suggested Citation

  • Guanchi Tong & Ningman Yang & Yanli Zhou, 2025. "Equity Pledges, Financing Constraints and Corporate Technological Innovation: Evidence from Chinese A-Share Listed Companies," Advances in Economics, Business and Management Research, in: Manhui Huang & Vilas B. Gaikar & Md Rabiul Islam & Ivan Krumov Todorov (ed.), Proceedings of the 2024 6th Management Science Informatization and Economic Innovation Development Conference (MSIEID 2024), pages 168-186, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-676-5_19
    DOI: 10.2991/978-94-6463-676-5_19
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