The Empirical Impact Of Going Public On Firm Innovation

Modern development economics theory holds that productivity growth is endogenous,and technological innovation is the source of economic growth.In Ameria,capital market has played an important role in the innovation wave of the1990 s.China,at present,is in the crucial transformation period of economic development,how to exert the impetus of capital market to enterprise innovation is an important problem.China's capital market is an emerging market,which is very different from the developed and mature markets in the United States.Then,how does going public influence enterprise innovation investment in China? Whether the government's policy of "quantitative layout,Quality win" be implemented? Facing the market pressure,how do IPO firms choose the innovation tactic: whether the firms adopt exploit innovation or the exploratory innovation,whether the firms prefer innovating independently or cooperation innovation?Although the existing literature has preliminarily discussed the influence of IPO on firm innovation,which seldom discusses the mechanism and takes the characteristic of China into consideration.Based on the theory of financial development,asymmetric information theory and principal-agent theory,this paper constructs the framework of how going pubic impacts on firm innovation from three aspects,innovation investment,innovation output and quality and innovation tactic.This study provides a more comprehensive interpretation of the impact of enterprise IPO on firm innovation behavior.Based on the samples from 2007 to 2012 China Shanghai A-share manufacturing enterprises IPO,the paper collects the relevant data of firm innovation input and innovation output,and carries on the empirical research.This article consists of seven chapters,which are arranged as follows:The first chapter,Introduction.This chapter mainly introduces the realistic background of the study,summarizes the theoretical and practical significance of the study,shows the research ideas and methods of this research,and makes the necessary definition and explanation of the main concepts of the study.Finally,the framework of this study is presented.The second chapter,literature review.Firstly,this chapter introduced the basic theories of financial development theory,asymmetric information theory and principal-agent theory,and reviews the related research on the influence of enterprises ' innovation,such as going public,financing channel,capital market and financing restraint.In addition,the paper summarizes the relevant literatures of the existing innovation tactic,sums up the research trends and research space of firm innovation.The third chapter,research background.This chapter mainly described the policy background and micro-development characteristics of China's technological innovation,from three aspects of the development and implementation of China's innovation-driven development strategy,the capital market firm innovation support policy and the current situation of Chinese firm innovation and so on three aspects of this study.The fourth chapter,the influence of IPO on firm innovation investment.This chapter analyzes the impact of IPO on firm innovation investment at first;Secondly,it investigates the impacts of characteristics of IPO enterprises on firm innovation behavior,including the industry attribute,the type of fund-raising investment project,the fund of raising funds and so on.Finally,it tests the two hypotheses of market pressure mechanism and financing constraints mechanism.Based on the sample of IPO of China's Shanghai-Shenzhen A-share manufacturing enterprises from 2007 to 2012,the research shows that:(1)The IPO of manufacturing enterprises reduces the investment of firm innovation;(2)In the cross-section test,I find that the negative effects of IPO on enterprise's innovation investment mainly occurs in firms in high-tech industry,as well as raising capital for innovation-related projects,raising capital investment projects and related enterprises;(3)The empirical test also found that market pressure will reduce the innovation investment of enterprises;(4)For enterprises with financing constraints,the negative effects of IPO on firm innovation investment is a little lower.The empirical findings of this chapter support the market pressure mechanism.The fifth chapter,the influence of IPO on firm innovation output and quality.Based on the sample of the IPO of China's Shanghai and Shenzhen A-share manufacturing enterprises from 2007 to 2012,this chapter examines the impact of IPO on the structure of firm innovation output,the quality of firm innovation output,and the economic consequences of innovative output.The study shows that:(1)Going public increases the firm innovation output,especially the invention patent and utility model patent.I found no evidence on the design patent;(2)Going public reduces the firm innovation output quality;(3)Firm innovation input and output mainly promote the enterprise financial performance,but for market excess income the influence is not significant.The sixth chapter,the influence of going public on firm innovation tactic.Based on the sample of China's Shanghai-Shenzhen A-share manufacturing market from 2007 to 2012,this chapter explores the choice of two groups of innovation strategies: the one is the choice of applied innovation and exploratory innovation,and the other is the choice of independent innovation and cooperative innovation.the influence of market pressure mechanism on the choice of firm innovation tactic was investigated from the perspective of two dimensions of large shareholder governance and market competition pressure.The empirical results show that:(1)Going public increase the applied innovation output and exploratory innovation output,but more inclined to choose applied innovation;(2)Going public increases the output of independent innovation and cooperative innovation,but more inclined to choose cooperative innovation;(3)major shareholder governance and industry competition pressure will affect the choice of firm innovation tactic.The seventh chapter is the research conclusion,the suggestion and the prospect.This chapter summarizes the whole study at first,then puts forward the policy suggestions correspondingly to promote the firm innovation according to the research conclusion under the background of the Chinese reality and the enterprise development stage.Finally,this chapter also points out the limitations of this research,and puts forward some research points that can be perfected and expanded in the future.This paper contributes to the the existing research as follows:Firstly,this study deeply analyzes the influence of going public on the innovation tactic of Chinese firms.With the development of economy in China,more research began to pay attention to the influence of capital market on Enterprise innovation,and some literature began to discuss the influence of going public on enterprise innovation output.However,few literature have discussed the influence of going public on enterprise innovation tactic under the background of China.This study can not only enrich the existing research literature,but also deepen the understanding of how capital market influence firm enterprises behavior,and have good policy implications for the innovation-driven development strategy and the landing of supply-side reform.Secondly,this paper provides a systematic empirical evidence from three aspects of innovation investment,innovation output,quality and innovation tactic for the impact of going public on firm innovation.Although there were few literature has begun to pay attention to the impact of enterprise innovation,but whether going public promotes innovation or not has not reached a consistent conclusion,a few research based on the background of China's system has drawn different research conclusions with foreign studies,the impact of going public on enterprise innovation and further experience in China system is still scarce.Based on the reality of China,this study discusses the influence of going public on firm innovation input,output and innovation tactic selection,and further introduces the characteristics of hightech industry,the type of investment project,market pressure mechanism,financing restraint mechanism and other factors.This study is not only the exploration,expansion and deepening of the existing research literature,but also provides new and important empirical evidence for understanding the relationship between the innovation of listed enterprises in emerging markets.Thirdly,based on the background of China and the unique data obtained by hand-collecting,this paper makes a specific adjustment to the measurement of innovative behavior such as the quality of innovation output,applied innovation and exploratory innovation,so that it can measure the innovation behavior of Chinese enterprises more effectively.Therefore,this paper provides a new research perspective and important empirical evidence for the research on the impact of IPO on firm innovation.