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Blockholders' Exit Threat, Myopic Behavior, and the Quality of Export Products

【Authors】
TANG Chao, ZHU Shujin
【WorkUnit】
Hunan University, 410079.
【Abstract】

Based on the data of listed firms from 2003 to 2015 and the customs database, this paper examines the impact of the exit threat of outside blockholders on the quality of export products and how their myopia exerts the effect. It finds that the increase in exit threats made by outside blockholders significantly and steadily promoted the quality upgrading of export products. Using the sub-sample and the mediating effect model to test the impact mechanism, the sub-sample regression results show that the promotion effect was more obvious for products with a high degree of quality differentiation, firms with long-term outside blockholders, and products exported to high-income countries; the mediating effect model shows that the increase in exit threats made by outside blockholders could improve the capacity of high-tech inventions and innovations, thereby improving the quality of export products. Thus, it shows that overcoming the myopic behavior of management and alleviating the conflict between management's short-term interest concerns and long-term investment are potential factors for the promotion effect. This study has some policy implications for China's capital market to better serve the real economy and cultivate new competitive advantages in the export market.


JEL:F23, G34

【KeyWords】
Blockholders' Exit Threat, Quality of Export Products, Myopic Behavior, Innovation