Managerial ownership and corporate innovation: evidence of patenting activity from Chinese listed manufacturing firms

Figures & data

Figure 1. The trend of managerial shareholding rates in the Chinese listed manufacturing sector (2008–2021). Note: The study has used the industry mean value for managerial ownership in this figure.

Table 1. Sample distribution.

Year	Total	Dummy (MO)=0	Dummy (MO)=1	Percentage (%)
2008	548	154	394	71.90
2009	592	155	437	73.82
2010	809	193	616	76.14
2011	1002	235	767	76.55
2012	1113	254	859	77.18
2013	1095	223	872	79.63
2014	1165	205	960	82.40
2015	1321	196	1125	85.16
2016	1477	218	1259	85.24
2017	1795	229	1566	87.24
2018	1854	213	1641	88.51
2019	1977	224	1753	88.67
2020	2283	269	2014	88.22
2021	2641	299	2342	88.68
Total	19672	3067	16605	100.00

This table displays the distribution of the sample over the period 2008 to 2021.

Table 2. Descriptive statistics.

	N	Mean	Std. Dev	Min	Max
Panel A: Dependent variables
Patent_total	20060	2.979	1.571	0.000	7.347
Patent_invention	20060	2.094	1.458	0.000	6.565
Patent_Gtotal	20060	2.795	1.515	0.000	6.899
Patent_Ginvention	20060	1.386	1.250	0.000	5.740
Panel B: Independent variable
MO	19672	17.352	21.485	0.000	73.266
Panel C: Control variables
FA	20046	2.816	0.367	0.693	4.159
FS	20046	21.955	1.151	19.539	25.852
ROA	18274	0.051	0.060	−0.285	0.280
LEV	20046	3.952	3.473	1.222	35.362
CR	20046	0.053	0.065	−0.178	0.308
AT	18274	0.693	0.389	0.121	3.219
SG	18273	0.173	0.309	−0.533	2.680
OC	20046	34.291	14.231	8.448	77.018
Panel D: Other variables
BS	20044	2.117	0.189	1.609	2.708
BI	20044	37.479	5.331	25.000	57.140
Dual	20046	0.320	0.467	0.000	1.000
R&D	20060	0.023	0.018	0.000	0.121

This table displays descriptive statistics of the main variables defined in Appendix A covering the sample period 2008-2021. All continuous variables were winsorised at the 1st and 99th percentiles.

Table 3. Pearson correlation analysis and variance inflation factor.

	Patent_total	MO	FA	FS	ROA	LEV	CR	AT	SG	OC	VIF
Patent_total	1.000
MO	−0.077	1.000									1.19
FA	0.103	−0.168	1.000								1.09
FS	0.461	−0.360	0.218	1.000							1.31
ROA	0.026	0.138	−0.067	0.002	1.000						1.58
LEV	−0.217	0.251	−0.156	−0.368	0.232	1.000					1.34
CR	0.022	−0.022	0.062	0.080	0.453	0.081	1.000				1.32
AT	0.068	−0.128	−0.007	0.148	0.200	−0.226	0.168	1.000			1.19
SG	0.030	0.077	−0.076	0.047	0.296	−0.059	0.007	0.168	1.000		1.17
OC	−0.011	−0.046	−0.115	0.079	0.124	0.009	0.085	0.152	0.004	1.000	1.06

This table displays the correlation coefficients for the key variables as defined in Appendix A. The Pearson correlation coefficients are represented in the lower triangle of the table. VIF indicates the variance inflation factor.

Table 4. Benchmark regression results.

	Patent_total		Patent_invention
	(1)	(2)	(3)	(4)
MO	0.002**	0.002**	0.003***	0.002***
	(2.38)	(2.19)	(3.03)	(2.68)
FA	−0.124	−0.098	−0.167	−0.126
	(−1.08)	(−0.85)	(−1.60)	(−1.19)
FS	0.566***	0.565***	0.586***	0.581***
	(25.32)	(24.85)	(27.73)	(27.23)
ROA	0.416***	0.540***	0.273*	0.488***
	(2.68)	(3.00)	(1.86)	(2.89)
LEV	0.007*	0.007*	0.007**	0.005
	(1.92)	(1.75)	(2.01)	(1.29)
CR		−0.241*		−0.021
		(−1.69)		(−0.16)
AT		−0.018		−0.128***
		(−0.36)		(−2.81)
SG		−0.017		−0.018
		(−0.59)		(-0.69)
OC		0.001		0.002
		(0.87)		(1.58)
Cons	−9.156***	−9.223***	−10.378***	−10.371***
	(−16.60)	(−15.97)	(−20.34)	(−19.57)
Year FE	Yes	Yes	Yes	Yes
Firm FE	Yes	Yes	Yes	Yes
N	17575	17573	17575	17573
Adj. R^2	0.736	0.736	0.727	0.727

This table displays the results of the impact of managerial ownership on corporate innovation. Patent_total and Patent_invention are the dependent variables, while MO is the independent variable. All regressions include year fixed effects and firm fixed effects. Parentheses are reported t-values of the robust standard errors. The symbols *, **, and *** represent significance at the 10%, 5%, and 1% levels respectively. The definitions of all variables can be found in Appendix A.

Table 5. Robustness check (1).

	Panel A: alternative dependent variables		Panel B: controlling managerial ability		Panel C: correcting selection bias
	Patent_Gtotal	Patent_Ginvention	Patent_total	Patent_invention	Patent_total	Patent_invention
	(1)	(2)	(3)	(4)	(5)	(6)
MO	0.003***	0.003***	0.002**	0.002**	0.002**	0.002***
	(3.06)	(4.38)	(2.48)	(2.53)	(2.06)	(2.60)
FA	0.024	−0.013	−0.002	−0.063	−0.049	−0.118
	(0.22)	(−0.14)	(−0.01)	(−0.57)	(−0.42)	(−1.11)
FS	0.535***	0.491***	0.571***	0.578***	0.558***	0.577***
	(24.77)	(25.54)	(25.08)	(26.55)	(24.54)	(26.89)
ROA	−0.164	−0.359**	0.985***	0.741***	0.109	0.258
	(−0.98)	(−2.43)	(5.15)	(4.14)	(0.55)	(1.40)
LEV	0.002	0.002	0.008**	0.007*	−0.000	0.001
	(0.56)	(0.70)	(2.05)	(1.75)	(−0.08)	(0.22)
CR	−0.117	0.069	−0.205	0.056	−0.292**	−0.072
	(−0.87)	(0.58)	(−1.41)	(0.42)	(−2.06)	(−0.54)
AT	0.006	−0.092**	0.125**	−0.034	−0.011	−0.121***
	(0.13)	(−2.19)	(2.28)	(−0.68)	(−0.22)	(−2.66)
SG	−0.025	−0.022	−0.007	−0.006	−0.016	−0.016
	(−0.98)	(−0.91)	(−0.24)	(−0.21)	(−0.58)	(−0.62)
OC	−0.001	0.001	0.002	0.003**	0.007***	0.005***
	(−0.60)	(0.96)	(1.49)	(2.46)	(3.41)	(3.01)
MA			−0.964***	−0.595***
			(−9.05)	(−6.16)
IMR					−0.658***	−0.358***
					(−4.64)	(−2.86)
Cons	−9.020***	−9.379***	−9.842***	−10.627***	−9.139***	−10.265***
	(−16.57)	(−20.04)	(−16.73)	(−19.38)	(−15.88)	(−19.35)
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes
Year FE	Yes	Yes	Yes	Yes	Yes	Yes
N	17573	17573	16749	16749	17481	17481
Adj. R^2	0.751	0.693	0.741	0.730	0.738	0.728

This table displays the results of the impact of managerial ownership on corporate innovation after alternative dependent variables, controlling for managerial ability by applying the two-stage DEA model and correcting for selection bias by adopting the Heckman two-stage sample selection model. The study considered alternative dependent variables, namely Patent_Gtotal, Patent_Ginvention, Patent_total, and Patent_invention, with the independent variable being managerial ownership (MO). IMR denotes inverse mills ratio. MA denotes managerial ability. All regressions include year fixed effects and firm fixed effects. Parentheses are reported t-values of the robust standard errors. *, ** and *** indicate significance at the 10%, 5% and 1% levels respectively. The definitions of all variables can be found in Appendix A.

Table 6. Robustness check (2).

	Patent_total				Patent_invention
	DIF GMM		SYS GMM		DIF GMM		SYS GMM
	1-STEP	2-STEP	1-STEP	2-STEP	1-STEP	2-STEP	1- STEP	2-STEP
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
MO	0.078**	0.029***	0.013**	0.012**	0.033**	0.017**	0.029***	0.027***
	(1.97)	(3.35)	(2.13)	(2.16)	(1.98)	(2.05)	(3.01)	(2.89)
FA	6.421	−0.044	1.127	0.928	−3.902	−4.469*	5.956***	5.822***
	(0.64)	(−0.01)	(0.80)	(0.74)	(−0.65)	(−1.67)	(3.12)	(3.06)
FS	−0.264	0.016	0.443***	0.430***	−0.037	0.159	0.344***	0.518***
	(−0.70)	(0.11)	(6.98)	(6.86)	(−0.13)	(1.14)	(3.00)	(4.82)
ROA	−2.641	2.534***	3.069	3.501	−1.035	1.784**	5.689***	5.099**
	(−0.21)	(3.33)	(0.47)	(0.61)	(−0.12)	(2.47)	(3.40)	(2.05)
LEV	−0.240	−0.282***	−0.096	−0.111*	−0.244*	−0.198***	−0.160	−0.018
	(−1.20)	(−3.58)	(−1.48)	(−1.76)	(−1.84)	(−3.03)	(−1.46)	(−0.18)
CR	−14.032	−2.777	−7.506	−6.762	−8.183	−1.298	−6.111	−8.332*
	(−1.20)	(−1.53)	(−1.28)	(−1.20)	(−0.99)	(−0.71)	(−1.37)	(−1.72)
AT	−1.091	−1.456***	1.068	0.980	−0.834	−1.023***	−0.409	0.531
	(−0.52)	(−3.61)	(0.85)	(0.84)	(−0.56)	(−2.59)	(−0.40)	(0.74)
SG	0.305	0.068	−0.352**	−0.360**	0.150	0.036	0.144	−0.083
	(1.19)	(0.66)	(−2.19)	(−2.26)	(0.93)	(0.38)	(0.58)	(−0.10)
OC	−0.299*	−0.100**	−0.039	−0.036	−0.201**	−0.136***	−0.078**	−0.102***
	(−1.90)	(−2.19)	(−1.14)	(−1.20)	(−2.55)	(−3.19)	(−2.54)	(−3.25)
L. Patent_total	0.304***	0.234***	0.223***	0.223***
	(3.46)	(6.18)	(8.70)	(8.71)
L. Patent_invention					0.282***	0.227***	0.327***	0.302***
					(3.26)	(3.60)	(9.53)	(8.63)
Year FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
N	14658	14658	17065	17065	14658	14658	17065	17065
No. of Firm	2012	2012	2316	2316	2012	2012	2316	2316
No. of Instruments	30	54	32	32	31	54	31	28
AR1 p-value	0.009	0.000	0.000	0.000	0.000	0.000	0.000	0.000
AR2 p-value	0.652	0.138	0.293	0.284	0.686	0.758	0.650	0.114
Hansen p-value	0.245	0.102	0.775	0.775	0.219	0.658	0.389	0.106

This table displays the results of the impact of managerial ownership on corporate innovation using the generalized method of moments (GMM) estimation (one step and two step). DIF GMM denotes difference GMM; SYS GMM denotes system GMM. The dependent variables include Patent_total and Patent_invention, the independent variable is managerial ownership (MO). Corresponding robust z-values are reported in parentheses. *, ** and *** indicate significance at the 10%, 5% and 1% levels respectively. The definitions of all variables can be found in Appendix A.

Table 7. Further analysis.

Input channel		Efficiency channel
	R&D	Patent_total	Patent_invention
	(1)	(2)	(3)
MO	0.001***	0.002*	0.002**
	(3.66)	(1.83)	(2.25)
FA	−0.004***	−0.058	−0.079
	(−3.13)	(−0.51)	(−0.77)
FS	−0.002***	0.582***	0.601***
	(−6.39)	(25.99)	(28.75)
ROA	0.001	0.533***	0.479***
	(0.36)	(3.00)	(2.89)
LEV	−0.000***	0.008**	0.006*
	(−2.79)	(2.10)	(1.70)
CR	0.004***	−0.285**	−0.070
	(2.67)	(−1.99)	(−0.54)
AT	0.010***	−0.116**	−0.240***
	(15.57)	(−2.31)	(−5.22)
SG	−0.002***	−0.000	0.000
	(−5.41)	(−0.01)	(0.01)
OC	0.000***	0.001	0.002
	(3.95)	(0.49)	(1.12)
R&D		10.298***	11.714***
		(11.85)	(13.73)
Cons	0.062***	−9.861***	−11.097***
	(9.14)	(−17.32)	(−21.33)
Year FE	Yes	Yes	Yes
Firm FE	Yes	Yes	Yes
N	17573	8551	8991
Adj. R^2	0.788	0.757	0.732

This table displays the results of using R&D as the dependent variable in column (1). Columns (2) to (3) present the results of this impact using Patent_total and Patent_invention as the dependent variables while controlling for R&D and other control variables. All regressions include year fixed effects and firm fixed effects. Parentheses reported the t-values of the robust standard errors. *, ** and *** indicate significance at the 10%, 5% and 1% levels respectively. The definitions of all variables can be found in Appendix A.

Table

	Measurement	References
Panel A: Dependent variables
Patent_ total	The natural logarithm of firm’s total patents (invention, design and utility) applied plus one.	(Iqbal et al., 2020; Yuan & Wen, 2018)
Patent_invention	The natural logarithm of firm’s invention patents applied plus one.	(Iqbal et al., 2020; Yuan & Wen, 2018))
Patent_Gtotal	The natural logarithm of firm’s total patents (invention, design and utility) granted plus one.	(Ding et al., 2022)
Patent_Ginvention	The natural logarithm of firm’s invention patents granted plus one.	(Ding et al., 2022)
Panel B: Independent variables
Managerial Ownership (MO)	The total equity holdings of top management as a fraction of firm’s total equity.	(Himmelberg et al., 1999)
Panel C: Control variables
Firm Age (FA)	The natural logarithm of the number of years since the firm’s establishment plus one.	(Liu & Lv, 2022)
Firm Size (FS)	The logarithm of total assets of a firm.	(Ding et al., 2022)
Return on Assets (ROA)	The net income of a firm divided by total assets.	(Yuan & Wen, 2018)
Financial Leverage (LEV)	The total debts of a firm divided by total assets.	(Yuan & Wen, 2018)
Cash Ratio (CR)	The cash holdings of a firm divided by total assets.	(Yuan & Wen, 2018)
Asset Turnover (AT)	The total revenues divided by total assets.	(Yuan & Wen, 2018)
Sales Growth (SG)	The ratio of the operating income changed to the operating income in the last year.	(Yuan & Wen, 2018)
Ownership Concentration (OC)	The percentage of shares held by the biggest shareholder.	(Jia et al., 2019)
Panel D: Other variables
Board Size (BS)	The natural logarithm of total number of board members.	(McGuinness et al., 2017)
Board Independence (BI)	The percentage of independent directors within the board.	(Yuan & Wen, 2018)
CEO Duality (Dual)	Dummy value equals 1 if CEO and Chairman of the board are the same person.	(Jun & Wang, 2018)
Research and Development (R&D)	The ratio of R&D investment to total assets.	(Brick et al., 2006)

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Data availability statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.