Corporate Governance Reforms and Innovation

38 Pages Posted: 6 Jul 2021

See all articles by Chen Lin

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Lai Wei

Lingnan University - Department of Finance and Insurance

Hui Zhao

China-ASEAN Research Institute and Fordham University

Date Written: June 21, 2021

Abstract

In this study, we investigate the effect of corporate governance reforms on corporate innovation by constructing a comprehensive firm-level panel dataset across 58 countries from 2000 to 2015. We find that both the quantity and quality of innovation decrease after the initiation of the reforms. Affected firms also conduct less innovation that explores new knowledge versus that exploits existing knowledge. The effect is more pronounced for firms operating in more competitive industries or with higher operational uncertainty. The results suggest that corporate governance reforms may induce managerial myopia and mitigate long-term investment in risky innovation.

Keywords: Board Reform, Corporate Innovation, Managerial Myopia

JEL Classification: G18, G34, O31

Suggested Citation

Lin, Chen and Wei, Lai and Zhao, Hui, Corporate Governance Reforms and Innovation (June 21, 2021). Available at SSRN: https://ssrn.com/abstract=3871294 or http://dx.doi.org/10.2139/ssrn.3871294

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Lai Wei (Contact Author)

Lingnan University - Department of Finance and Insurance ( email )

8 Castle Peak Road
Lingnan University
Hong Kong, New Territories
China

Hui Zhao

China-ASEAN Research Institute and Fordham University

East Daxue Road #100
Nanning, Guangxi 530004
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
69
Abstract Views
366
rank
412,454
PlumX Metrics