Board Networks and Corporate Innovation

64 Pages Posted: 31 Jan 2017 Last revised: 16 Sep 2017

See all articles by Chinghung (Henry) Chang

Chinghung (Henry) Chang

National Taiwan University - College of Management

Qingqing Wu

North Carolina State University

Date Written: September 1, 2017

Abstract

This paper studies whether board connectedness affects corporate innovation. We find that well-connected boards have a positive impact on innovation activities and quality. The effect is stronger when firms have higher advising demand or face more severe agency problems. We show that the positive relation is causal and robust, based on a battery of empirical tests including exogenous variation in board connectedness resulting from death and retirement of directors and from a regulatory shock from new exchange listing rules. We also provide evidence that types and relatedness of connections, as well as director characteristics, contribute to cross-sectional heterogeneity of the positive effect.

Keywords: Board network, Innovation, Directors, Monitoring, Advising

JEL Classification: G30, G34, L14, O31

Suggested Citation

Chang, Ching-Hung and Wu, Qingqing, Board Networks and Corporate Innovation (September 1, 2017). Asian Finance Association (AsianFA) 2017 Conference. Available at SSRN: https://ssrn.com/abstract=2908696 or http://dx.doi.org/10.2139/ssrn.2908696

Ching-Hung Chang (Contact Author)

National Taiwan University - College of Management ( email )

Department and Graduate Institute of Finance
College of Management
Taipei 106
Taiwan

Qingqing Wu

North Carolina State University ( email )

Poole College of Management
Raleigh, NC 27695-7229
United States

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