Thesis
Foreign institutional ownership and corporate leverage adjustment, innovations and performance: evidence from China
- Creator
- Rights statement
- Awarding institution
- University of Strathclyde
- Date of award
- 2025
- Thesis identifier
- T17536
- Person Identifier (Local)
- 202085218
- Qualification Level
- Qualification Name
- Department, School or Faculty
- Abstract
- This thesis investigates the influence of foreign institutional ownership (FIO) on three key aspects of Chinese listed firms: the speed of capital structure adjustment, research and development (R&D) investment, and corporate performance. While prior studies have examined the role of FIO in developed markets, systematic evidence from China remains limited due to its distinct governance, regulatory, and ownership structures. Using a comprehensive panel of Chinese A-share firms, this study provides new insights into how foreign institutional investors shape firms’ financial behaviour and outcomes in an emerging market context. The first empirical chapter analyses whether FIO enhances the speed at which firms adjust their leverage toward target levels. Employing a two-stage partial adjustment model and a difference-in-differences (DID) approach based on the 2019 removal of the Qualified Foreign Institutional Investor (QFII) quota restrictions, the results show that FIO significantly accelerates firms’ convergence to optimal leverage ratios. The effect is stronger in firms with lower state ownership, higher transparency, and greater innovation intensity, suggesting that foreign investors mitigate capital adjustment frictions through governance and monitoring mechanisms. The second empirical chapter examines how FIO affects firm innovation, measured by R&D intensity and the time taken to reach industry-average R&D levels. OLS results reveal a negative relationship between FIO and R&D intensity, indicating cautious or short-term investment preferences. However, Cox survival analysis demonstrates that FIO significantly shortens the time required for firms to reach the industry-average R&D benchmark, implying that foreign investors promote innovation alignment rather than excessive risk-taking. The effect is particularly pronounced in non-state-owned firms and in industries supported by the Made in China 2025 (MC2025) policy, highlighting FIO’s dual role as a corrective incentive and strategic overseer. The third empirical chapter explores the impact of FIO on firm performance, using accounting indicators (ROA, ROE, EBIT) and market valuation (Tobin’s Q). The findings indicate that FIO improves profitability and valuation but may reduce EBIT, consistent with enhanced cost efficiency and strategic resource reallocation. The governance effects are stronger among firms with concentrated foreign ownership, broader investor coverage, and long-term or active investment orientation, while weaker in state-owned enterprises. Robustness checks using lagged variables, first-difference models, and policy-based DID estimations based on the 2014 Shanghai–Hong Kong Stock Connect confirm the consistency of the results. Overall, this thesis provides robust empirical evidence that foreign institutional ownership influences corporate financial decisions through governance, incentive alignment, and institutional channels. By integrating agency theory, institutional monitoring, and policy embeddedness, the study deepens understanding of how global capital interacts with China’s institutional environment. The findings contribute to the literature on corporate governance, financial liberalisation, and emerging markets, suggesting that high-quality foreign investors can enhance firms’ governance, innovation, and long-term performance under supportive regulatory conditions.
- Advisor / supervisor
- Paudyal, Krishna
- Tang, Leilei
- Resource Type
- DOI
关系
项目
| 缩略图 | 标题 | 上传日期 | 公开度 | 行动 |
|---|---|---|---|---|
|
|
PDF of thesis T17536 | 2026-01-08 | 公开 | 下载 |