This paper explores how a prominent place-based policy in China, the national high-tech zones, affects local innovation output and entrepreneurial activities. Making use of staggered establishments of national high-tech zones in various Chinese cities, we find that the establishment of national high-tech zones has positive effects on local innovation output and entrepreneurial activities. A number of additional tests suggest that the effects appear causal. Access to finance, reductions in administrative burdens, and talent cultivation are three plausible underlying economic channels. Our paper sheds new light on the evaluation of the effectiveness of China’s place-based policies.

We examine how financial market development affects technological innovation. Using a large data set that includes 32 developed and emerging countries and a fixed effects identification strategy, we identify economic mechanisms through which the development of equity markets and credit markets affects technological innovation. We show that industries that are more dependent on external finance and that are more high-tech intensive exhibit a disproportionally higher innovation level in countries with better developed equity markets. However, the development of credit markets appears to discourage innovation in industries with these characteristics. Our paper provides new insights into the real effects of financial market development on the economy.

We find strong evidence that when a firm's customer base is more concentrated, the firm's CEO receives more risk-taking incentives in her compensation package. This finding is robust to numerous alternative measures, alternative specifications, alternative subsamples, and different attempts that mitigate endogeneity concerns. Further, the positive effect of customer concentration on CEO risk-taking incentive provision is more prominent when the CEO is more reluctant to take risks, when the firm has more investment opportunities, and when the firm is more prone to the costs of losing large customers. These findings are consistent with the notion that boards provide additional risk-taking incentives to offset the CEO's aversion to the risk of non-diversified revenue streams, thereby preventing excessive managerial conservatism at the expense of value maximization.

Firms with more competitive threats from the product market are less likely to commit violations and pay lower penalties. These findings are robust to alternative measures, specifications, and subsamples, as well as different attempts that mitigate endogeneity concerns. Further analyses reveal that the disciplining effect of competition is more pronounced when managers have greater incentives to shirk and when internal governance is weaker, and that violations are associated with poor product market performance only in the presence of competitive pressure. Firms under competitive pressure are more likely to adopt ESG-related incentives in executive compensation contracts and exhibit better worker safety practices. Overall, our evidence suggests that product market threats reduce managerial slack in combating misconduct by increasing the expected damage of violations.