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Corporate Governance and Innovation

Journal of Financial and Quantitative Analysis, Forthcoming

31 Pages Posted: 6 Mar 2011  

Matthew Rafferty

Quinnipiac University - Department of Economics

Matthew L. O'Connor

Quinnipiac University

Date Written: February 28, 2011

Abstract

We use Tobin's q models of investments to estimate the relationship between corporate governance and the level of innovative activity. Simple OLS models suggest that poor governance reduces innovative activity. However, OLS results are sensitive to controlling for serial correlation, unobserved effects, or using instrumental variables to control of simultaneity. Controlling for these effects substantially reduces or eliminates the relationship between governance and innovation activity.

Keywords: Corporate Governance, Research and Development

JEL Classification: G34, O32

Suggested Citation

Rafferty, Matthew and O'Connor, Matthew L., Corporate Governance and Innovation (February 28, 2011). Journal of Financial and Quantitative Analysis, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1773020

Matthew Rafferty (Contact Author)

Quinnipiac University - Department of Economics ( email )

275 Mount Carmel Avenue
Hamden, CT 06518
United States
203-582-3396 (Phone)
203-582-8664 (Fax)

HOME PAGE: http://faculty.quinnipiac.edu/business/rafferty/homepage.html

Matthew L. O'Connor

Quinnipiac University ( email )

275 Mt. Carmel Avenue
School of Business, Finance Department
Hamden, CT 06518
United States
203-288-5251 (Phone)

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