Exploiting a unique market-oriented media reform initiated in 1996 in China, we investigate the role of media environment in affecting firm behaviour. We find robust evidence that market-oriented media environment is conductive to firm innovation, with the reform promoting patent quantity and quality substantially. The effect is more pronounced for firms with higher information asymmetry. Matching firm data with 1.3 million news reports, we find the market-oriented media reform significantly improves the criticalness and unbiasedness of news coverage and shapes an innovation-friendly environment. Our findings highlight economic outcomes of relaxing media control and underline substantial gains from deepening the reform.

This research examines the impact of foreign shareholder on executives’ pay stickiness by analyzing China’s listed companies from 2007 to 2021. The analysis finds that foreign shareholder ownership leads to an increase in executive pay stickiness. This is evident in the increased upward pay sensitivity. The individualistic cultural tendency of foreign shareholders and executives’ power play a crucial role in this mechanism. Additionally, the positive impact of foreign ownership on executive pay stickiness is more significant in the sample where foreign shareholders are the actual controllers and the internal and external monitoring is weak. Furthermore, the hypothesis regarding the positive effect of executive pay stickiness is validated by identifying the increasing role of executive pay stickiness in firm innovation and value.

The past three decades have witnessed the boom of patents and mounting place-based innovation policies (PIPs) in China. However, the PIP-innovation nexus, particularly the distortion effect and underlying mechanisms, remains poorly understood. Matching micro-level patent data and industrial firm data, we documented a promotion effect of PIPs on local firm innovation measured by both patent quantity and quality. Moreover, we observed a distortion effect on patent quality following the 2008 crisis, primarily originating from privately owned enterprises rather than stateowned ones. Drawing from theories of technological learning and the unique institutional characteristics of PIPs in China, we have further unpacked the underlying mechanisms driving these effects: Both industry-academia collaboration and foreign direct investment play significant roles in the PIP-innovation nexus, and the latter appears to be particularly influential in causing the distortion effect. Additionally, our analysis has revealed that preferential policies, such as patent subsidies and reductions in land prices, are instrumental in enabling PIPs to exert their impact.

The effects of skyscraper development on surrounding firms’ innovation in China is assessed in this paper, and empirical results show that skyscraper development significantly promotes the innovation of firms within 1 km of skyscrapers. However, such effect only exists around very tall skyscrapers in large cities. This means that skyscraper development in small cities often is unfit for the economic fundamentals of these cities, which may weaken the positive externalities generated by skyscrapers. The mechanism analysis in this paper shows that increased surrounding population density brought by skyscraper development and knowledge sharing between firms surrounding the skyscrapers and other firms in the same city are the main paths through which skyscrapers affect innovation.

We examine the effects of China's 2009–2010 stimulus package for innovation differentials between state-owned firms (SOEs) and privately-owned firms (POEs). Using a unique dataset of Chinese manufacturing firms, we find that in the pre-stimulus period SOEs patent at a lower rate than POEs in the least inventive patent category, and at a comparable rate in the more inventive categories. Post-stimulus, SOEs patent at an even lower rate relative to POEs in the least inventive category, but significant, positive SOE-POE patent rate differentials emerge in more inventive patent categories. The stimulus disproportionately benefited SOEs with higher investment subsidies and lower finance costs—institutional support which we find mediates roughly 45 percent of all positive effects of state-ownership for innovation. Institutional support produces larger SOE-POE innovation differentials among firms in strategic sectors and located in high-marketization provinces, and for centrally controlled SOEs.

We examine the impact of institutional investor networks on firm innovation in China. Employing the unexpected departure of mutual fund managers and the inclusion of the Shanghai-Shenzhen 300 index as identifications, we find that institutional investor networks have a positive impact on firm innovation. Specifically, firms that are hold by well-connected institutional investors are motivated to make R&D investments and receive greater patents than their counterparts. This positive influence is more pronounced for non-SOEs and for firms located in less-developed regions, indicating that institutional investor networks act as information flow facilitator and a value certifier to encourage innovation activities.