From a policy perspective, university spin-offs (USOs) with venture capital (VC) investment are most promising because they are growth-oriented and contribute most prominently to economic growth. Hence, effective policies should consider the motivation of VC investment in USOs. By employing a manually collected novel database that includes all listed high-tech USOs and related VC investment activities prior to initial public offering (IPO) in China over the past three decades, we observe a close relationship between a multi-layered second-tier stock market and a vibrant VC market for USO financing. We find that USOs receive less investment from government VCs and mixed-VC syndicates and receive their investment in an earlier stage than non-USOs but that private VCs have no funding bias against USOs. The result implies the presence of crowding-in effect of government VCs in the context of USO financing. Moreover, VC investment in USOs is more pronounced in deals that have a higher initial equity commitment of academic founders and a noncontrolling strategy, highlighting the importance of delivering “value”, “commitment”, and “trust” signals in winning VC funding. Finally, as private VCs in the form of limited partnerships behave like typical pre-IPO-stage investors, they barely demonstrate any significant preference over these factors.

This paper contributes to the literature by examining the impact of different forms of state ownership on corporate innovation and the moderating effects of environmental, social, and governance (ESG) practices, economic policy uncertainty (EPU), and corruption in this ownership–innovation nexus. Building on both agency theory and institutional theory, we identify and divide the ultimate controlling shareholders into three types: central government, local government, and private shareholders. This study draws on data from 2629 listed firms in China between 2007 and 2015. Our results suggest that state-owned enterprises (SOEs) controlled by the central government show the strongest innovation performance in all scenarios. In addition, private firms outperform local SOEs in terms of patent quantity in both manufacturing and nonmanufacturing sectors and in high-economic-development regions, whereas local SOEs outperform their private peers with respect to patent quality, mainly in the manufacturing sector and high-economic-development regions. Such an ownership–innovation nexus is then found to be more pronounced for firms engaging in more ESG practices, during periods of higher EPU, and when less corruption is present. These findings demonstrate the value of diversity in state capitalism in guiding SOEs' heterogeneous innovation activities in emerging economies.

The changing face of responsible investing (RI) raises an important question concerning whether social responsibility influences the decision making of institutional investors in the “sin” industries. This study addresses this issue by investigating whether and how the implementation of various government initiatives concerning environmental, social, and governance (ESG) issues affect the institutional ownership of casino firms in Macao, the world's gaming capital. Employing structural equation modeling, this study further examines whether and how RI makes financial sense in this special industry. The results show that the implementation of all four ESG-improving government initiatives (including an anticorruption campaign, visa restriction, smoking bans, and responsible gambling) leads to a significant increase in the institutional ownership of casino firms in general, demonstrating the presence and mechanism of RI in the “sin” industries. Such RI is then found to be conducive to a lower equity risk of casino firms in general. The results also illustrate that these intuitional investors are not one homogeneous group. The norm-constrained institutions are the prominent responsible investors and can help strengthen the equity risk management of casino companies whereas the natural arbitrageurs do not undertake any significant role in this regard. The results are robust across various estimation techniques, model specifications and alternative measures of firm risk.