To further strengthen investors’ supervision and administration over SOEs, the State Council and local governments have successively introduced accountability systems from 2016 to 2020. The core of the accountability system lies in building a clear and effective management and investment responsibility system with clear rights and responsibilities. However, the strengthening of accountability for investors has also sparked widespread controversy in the industry, as it is believed that accountability may suppress the innova- tive spirit of SOE managers, leading to their unwillingness to take risks and adopt inactive investment decisions.

Based on the introduction of the accountability system in different provinces, this paper uses a staggered DID research design to examine the effect of the accountability system on SOE innovation efficiency. The results show that the accountability system has an innovation-driven effect, improving SOE innovation efficiency. Mechanism testing reveals that the accountability system mainly plays a role by suppressing the agency problems of the management and improving the quality of internal control. Heterogeneity analysis finds that the innovation-driven effect is more pronounced in SOEs with lower participation of non-state-owned shareholders in governance, lower media attention, and longer executive tenure. Further analysis shows that the accountability system improves SOE innovation quality, which is manifested in a significant increase in invention patents, utility model patents, and breakthrough innovations, as well as an increase in patent citation and an improvement in the value added effect of innovation.

This paper has the following contributions: First, it offers key evidence for the economic consequences of the accountability system from the perspective of innovation efficiency, and responds to the concerns and disputes that the strengthening of accountability may constrain executives’ enthusiasm in SOEs. Second, it complements the literature on the factors of SOE innovation by showing that the accountability system can improve SOE innovation efficiency. Third, it has important enlightenment for improving the supervision system of state-owned capital, promoting SOEs to play a leading role in innovation, and vigorously developing new quality productive forces.