Research On The Relationship Between Managerial Power,Corporate Innovation And Stock Price Crash Risk

In the 2018 government work report,it states clearly to "implement the innovation-driven development strategy and strengthen the construction of technological innovation system with corporates as the main body".Meanwhile,for the capital market,it is required to "properly deal with abnormal fluctuations in the financial market,regulate the order of the financial market,and maintain the national financial and economic security".We could see that corporate innovation and capital market stability are two important issues under the new norms of China's economy.From the perspective of corporate innovation drive,China's overall innovation level has been greatly improved,but the essential innovation capacity needs to be strengthened.As the main body of technological innovation,high-quality innovation is not only the driving force of its own development,but also the key factor driving economic growth in the transition period.Executives,top of the corporate hierarchy,are decision makers and executors of innovation.Executives may inhibit innovation out of their own risk aversion,promote innovation out of entrepreneurship,and use it as a tool to get private profits.Therefore executives use power to impact significantly on innovation within the corporates.In terms of capital market stability,as an emerging capital market,the phenomenon of sharp rising and sharp falling in stock prices occurs from time to time,and the crash caused by collapse is extremely harmful to the market.The academic community generally believes that the information asymmetry caused by internal agency problem is the internal cause of stock price crash risk,and investors' response is the external cause.China's special institutional background makes the formation and expansion of managerial power.The agency problem and information asymmetry caused by the decision-making behavior of corporates may aggravate the stock price crash risk in the external capital market.Taking this as an opportunity,in the context of the continuous expansion of the managerial power in China,which leads to more agency problems,the call for innovation at the national level,but the limited effect of substantive innovation and the volatility of stock prices in the capital market,the paper distinguishes heterogeneous property rights and investigates the relationship between managerial power,corporate innovation and stock price crash risk.It has important theoretical and practical significance for balancing the managerial power,improving corporates' substantial innovation ability,reducing the stock price crash risk,and maintaining the stability of financial market.This paper selects the sample data of A·share listed companies from 2006 to 2017,using a combination of normative research and empirical research.The thesis firstly reviews the related literature of managerial power,corporate innovation and stock price crash risk.Based on the principal-agent theory,information asymmetry theory,residual control theory of contract view and modem stewardship theory,over-confidence theory of behavioral view,combining with the institutional background of the formation of managerial power in China.we refine the theoretical analysis framework of managerial power.corporate innovation and stock price crash risk.Then using the non-balanced panel data to conduct OLS regression and Tobit regression,moderator effect analysis and mediator effect analysis,we explore the impact of managerial power on innovation input and innovation output,the impact of managerial power on stock price crash risk,the impact of corporate innovation behavior on stock price crash risk,and the conduction of managerial power on stock price crash risk through innovation.We found:First at all.the managerial power improves the level of innovation input and output.However,it cannot be attributed to executives as a manifestation of the motivation and entrepreneurial spirit of safeguarding shareholders' interests.Among the state-owned enterprises,the managerial power has crowding-out effect on innovation input,and has no significant correlation with innovation input.Compared with substantive innovation,managerial power plays a more significant role in promoting strategic innovation.Non-state-owned enterprises may face a severe market competition enxrironment and less government intervention,the managerial power promotes innovation input and substantive innovation.but it may also be influenced by "tunneling" motivation,using innovation input as an agent tool,thus promoting innovation input and strategic innovation.When the institutional environment functions as a moderating variable,a good institutional environment constrains the self-interest motivation of executives,reduces the degree of government intervention and provides a loose innovation environment,thus promotes innovation input and substantial innovation.Second,the managerial power increases the stock price crash risk.In non-stated-owned enterprises with scattered equity,the supervisory effect of the relative major shareholders has inhibited the positive correlation between the two.In non-state-owned enterprises with concentrated equity,the tunneling effect of controlling shareholders has aggravated the positive correlation between the two.The risk aversion motivation of executives in non-state-owned enterprises is obvious,and the positive correlation between the two is weaker than that of non-stated-owned enterprises.By studying the influence mechanism of the above relationship rules,we could find that the main reason why the managerial power affects the risk of stock price crash is not the executives'overconfidence but the deep agency problem.The institutional environment restricts the expansion of executive power and increases the transparency of information,thus effectively restrains the positive correlation between the two.Third,innovative output reduces the uncertainty of innovation and inhibits the stock price crash risk;and the confidence effect of investors' focus increases the negative correlation between the two.The innovation input increases information asymmetry and aggravates the stock price crash risk;and the information interpretation effect of investors'focus reduces the positive correlation between the two.Innovation input increases information asymmetry and exacerbates the risk of stock price collapse.Increasing innovation input may also become a tool for insiders to reduce their holdings.Insiders selling increases the stock price crash risk,and investors' focus causes market panic,thus enhances the positive correlation between the two.Finally,in total samples and non-state-owned samples,the stock price crash risk influenced by managerial power has a partial mediating effect in the path of irnovation input,and has a partial covering effect in the total level of innovation output and substantial innovation.In the state-owned samples,neither the innovation input nor the output can achieve the mediating effect of managerial power on the stock price crash risk.