An empirical study of China’s financial institutions holding non-financial listed companies’ shares on company innovation - a moderated mediating effect

Abstract

The economy of China is gradually transforming from high-speed development to high-quality development. The innovation in companies is conducive to companies’ sustainable development, but innovation is often accompanied by risks and instability that needs the support of a large amount of capital. Financial institutions holding non-financial companies’ shares are favourable in alleviating the financial constraints of companies and they are of great significance in promotion of technological innovation and industrial technological upgradation of non-financial companies. The data for this study is selected from China’s a-share non-financial listed companies from 2013 to 2020 as research samples and data is empirically tested to show the effects of the industry-finance combination on non-financial companies and their technological innovation by creating the multiple regression equation. The test results showed that financial institutions holding non-financial companies’ shares significantly promoted the investment in the innovation of technology in non-financial companies. Through stepwise regression and other methods, it is concluded that financing constraints had a mediating effect on financial institutions holding entity companies’shares and company innovation. Financial institutions holding non-financial companies’ shares could promote technological innovation of companies by easing financial constraints, and the monetary policy as they had a moderating effect on this mediation. In addition, this paper conducted the sub-industries’ test on financial institutions holding non-financial companies’ shares and non-financial companies’ technological innovation through cluster analysis. Moreover, it examined the impact of property rights nature according to the basic national conditions of China. This study offers a new method for the innovation of companies in China and it provides a prerequisite for the high-quality economic development and industrial upgrading of China.