The 26th Academic Luncheon of the Digital Technology and Finance

Abstract：

This paper investigates how enhanced court enforcement within a pro-creditor legal framework influences corporate innovation. Leveraging the positive shock on court enforcement resulting from the staggered establishment of bankruptcy tribunals in China, we reveal a substantial increase in corporate innovation intensity. This effect is particularly pronounced for privately controlled firms and in regions with greater banking competition. We propose and examine three mechanisms to elucidate this effect: the enhancement of credit supply, increased risk tolerance among creditors, and the release of extensive credit from zombie firms through more liquidations. In addition to exploring within-firm outcomes, we assess distributive effects of the judicial reform in terms of firms’ innovation efficiency. Our findings indicate that firms with higher efficiency in transforming innovation input into output exhibit a greater number of patent applications subsequent to the reform. This study sheds light on the pivotal role of court enforcement in shaping real innovative activities.

Speaker Introduction：

Yanan Wang, Associate Professor of the School of Finance, Zhongnan University of Economics and Law. She holds a Doctorate in Economics from Fudan University and completed her joint doctoral training at WHU-Otto Beisheim School of Management in Germany. Her main research field is corporate finance. Currently, she is the principal investigator of a youth project funded by the National Natural Science Foundation of China and has participated in multiple projects funded by the National Natural Science Foundation of China and the National Social Science Fund of China. Her research has been published in several domestically important journals such as Economic Research Journal, Journal of Financial Research, and The Journal of Quantitative & Technical Economics, as well as in SSCI journals including Journal of Corporate Finance, Journal of Business Ethics, Journal of Economic Behavior and Organization, China Economic Review, Energy Economics, and Journal of Business Finance & Accounting.