Research on the Influence of Market Value Fluctuation on Innovation Decision of Listed Enterprises from the Perspective of Loss Aversion

Abstract

Concerns regarding publicly traded companies' R&D investment have long existed among academics domestically and overseas. Scholars have conducted much research on the R&D investment of enterprises from different angles. This study starts from the perspective of market expectation and loss aversion, taking the data of Chinese quoted companies from 2011 to 2020 as a sample and using the empirical analysis method to research the impact of changes in market value on quoted companies' innovation decisions. Robustness tests effectively corroborate the findings of the study, which found a substantial positive association between changes in the market value of listed businesses and the degree of innovation investment. Additionally, this study conducts a group regression test on the R&D investment growth rate (RDI) of state-owned companies (SOEs) and non-state-owned firms using the two explanatory variables of total market value growth rate (RDI) and Tobin's Q value (Tobin's Q) (NSOEs). It is discovered that NSOEs are more vulnerable to market capitalization change than SOEs are, and the listed businesses' intentions to innovate are influenced by changes in market capitalization through the loss aversion mechanism.