Does minority shareholder activism enhance corporate innovation? Evidence from China

Minority shareholder activism (MSA) on online interactive platforms is a novel form of corporate governance in China. This paper investigates whether, and how, innovation-related minority shareholder activism affects corporate innovation. We find that MSA is significantly positively related to firms’ future innovation output. We establish a causal relationship between MSA and future innovation output using both instrumental variable and propensity score matching approaches. We further find that MSA's governance effect on innovation is consistent with career concerns rather than the quiet life hypothesis. Additionally, we find that MSA's effects substitute for institutional investor activism's effects.