Does Stock Liquidity Enhance Enterprises' Innovation Input?

Today has been a time of knowledge and economy,and innovation strategy has become the theme of the development in our country.Innovation plays an important role in promoting the development and upgrading the competitiveness of enterprises.So scholars have paid more and more attention to study what affect innovation.But there is little research about the effect of stock liquidity on China's enterprises' innovation input,which starts from the perspective of the market microstructure structure.This paper refines indexes which measure stock liquidity from multiple dimensions from 2009-2014 “Shanghai Stock Exchange Market Quality Report”,and divides innovation input into fund and talent.Using fixed effects model,this paper explores the effect of SSE A Shares' stock liquidity on their innovation input thoroughly and carefully.The results show that stock liquidity enhances enterprises' innovation fund input and talent input significantly.The indexes disclosed in “Shanghai Stock Exchange Market Quality Report” measure stock liquidity from multiple dimensions.To measure stock liquidity comprehensively,this paper refers to the previous literature and constructs an integrated index to evaluate liquidity,which gives marks to each enterprise according to the values of the liquidity indexes.Using the integrated stock liquidity index to test the effect of stock liquidity on innovation input again,this paper finds that previous results remain valid.Then,this paper not only classifies sample into state-owned and non-state-owned enterprises according to ownership heterogeneity,but also classifies sample into innovation and non-innovation industry enterprises according to industry heterogeneity.The purpose is to examine whether the effect of stock liquidity on innovation input is different for different characteristics of the enterprises.The results show that the positive effect of stock liquidity on innovation input is irrelevant to enterprise characteristics.Besides,based on a quasi-natural experiment that enlarging the scope of margin purchase and short sale underlying stocks,and according to the related theories and the predecessors' research results,this paper adopts the mean difference test and the difference-in-differences method to examine how stock liquidity affects enterprises' innovation input.This paper finds that the increase of the shareholding ratio of the top five major shareholders and institutional investors is the main cause of enhancing innovation input.Higher stock liquidity facilitates the entry of big shareholders and institutional investors,who can monitor managers efficiently and influence their investment decisions,then enterprises' innovation input will be enhanced.This paper not only provides evidence from China market for this new perspective of the effect of stock liquidity on enterprises' innovation input,but also provides advice for enterprises and regulators to improve stock liquidity so as to promote the development of innovation.This research also has reference significance for investors to make investment decisions.