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The impact of the Shanghai – Hong Kong stock market connection on corporate innovation: Evidence from mainland China

He, G.; Li, X.; Luo, J.

The impact of the Shanghai – Hong Kong stock market connection on corporate innovation: Evidence from mainland China Thumbnail


Authors

X. Li

J. Luo



Abstract

The Shanghai stock market and the Hong Kong stock market were connected by the Chinese government in 2014, allowing Hong Kong investors to trade on a group of stocks on the Shanghai stock market. Using a difference-in-differences approach, we examine how this stock market connection affects corporate innovation in mainland China. We argue, and find, that the stock market connection enhances the informational feedback effect of stock prices and involves more-sophisticated investors' monitoring and advising on firm management, and thereby spurs corporate innovation. We further show that the positive effect of the stock market connection on innovation is more pronounced for non-state-owned firms, firms with few political connections, firms with weak intellectual property rights protection or firms that are headquartered in non-high-tech economic zones. Our study sheds light on how the opening of a developing stock market to a more developed stock market shapes corporate innovation.

Citation

He, G., Li, X., & Luo, J. (2021). The impact of the Shanghai – Hong Kong stock market connection on corporate innovation: Evidence from mainland China. International Journal of Finance and Economics, https://doi.org/10.1002/ijfe.2587

Journal Article Type Article
Acceptance Date Nov 29, 2021
Online Publication Date Dec 13, 2021
Publication Date Dec 13, 2021
Deposit Date Nov 30, 2021
Publicly Available Date Dec 14, 2023
Journal International Journal of Finance and Economics
Print ISSN 1076-9307
Publisher Wiley
Peer Reviewed Peer Reviewed
DOI https://doi.org/10.1002/ijfe.2587
Public URL https://durham-repository.worktribe.com/output/1220248
Publisher URL https://scialert.net/jhome.php?issn=1991-0886

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