Institutional investor shareholding and the quality of corporate innovation: Moderating effects based on internal and external environment

Improving the quality of enterprise innovation is a key path to implementing the innovation-driven development strategy and thus promoting high-quality economic development. Using a sample of Chinese A-share listed companies from 2011 to 2019, this paper empirically examines the impact of institutional investor shareholding (IIS) on corporate innovation quality. The study finds that (1) IIS has a significant effect on the quality of corporate innovation, and it can also improve the quality of corporate innovation by increasing corporate financial support and promoting the efficiency of corporate management. (2) Heterogeneous IISs have different impacts, with pressure-defensive IIS contributing more significantly to the quality of corporate innovations than pressure-sensitive IIS. (3) The internal and external environments play an important moderating role. External market competition incentives and supervision means play a positive moderating role; internal financing constraints and business risks play a negative moderating role.