Do shareholders tolerate faults in scientific and technological innovation? Evidence from Chinese listed companies

Based on the data of Chinese A-share listed companies from 2009 to 2017, this paper examines whether or not shareholders tolerate the faults of scientific and technological (S&T) innovation and the effect of firm heterogeneity on this relationship. The empirical results show that, in general, shareholders do not tolerate faults in S&T innovation, and this intolerance intensifies with a longer failure time; there are differences in shareholders' fault tolerance in different types of companies; shareholders of companies with high profitability and financial risk tend to tolerate faults in S&T innovation. This paper might provide some new insights for corporate shareholders to devise reasonable S&T strategies.