Academic Directors and Corporate Innovation

48 Pages Posted: 2 Nov 2021

See all articles by Yutong Xie

Yutong Xie

The College of New Jersey - School of Business

Jin Xu

Virginia Tech - Pamplin College of Business

Ruiyao Zhu

Virginia Tech - Pamplin College of Business

Date Written: November 1, 2021

Abstract

We show that academic directors significantly increase firms’ R&D investment and innovation outputs. Following an academic director’s death and relative to a non-academic director’s death, the average firm reduces R&D by 2.0% of total assets and its market value of innovations declines by 4.4%. The results are not driven by PhD CEOs or non-academic PhD directors. Consistent with an advising channel, academic directors in STEM disciplines are particularly pro-innovation. Firms with academic directors are more likely to dismiss the CEOs if they spend less in R&D, suggesting a monitoring channel at work as well. Academic directors are associated with higher firm value at firms where innovation is more important but not at other firms. Overall, our results highlight the vital advising and monitoring roles academic directors play in corporate innovation.

Keywords: Innovation, R&D, Academic Directors, Research, Corporate Board, Advising and Monitoring

JEL Classification: G30, O30, I23

Suggested Citation

Xie, Yutong and Xu, Jin and Zhu, Ruiyao, Academic Directors and Corporate Innovation (November 1, 2021). Available at SSRN: https://ssrn.com/abstract=3954290 or http://dx.doi.org/10.2139/ssrn.3954290

Yutong Xie

The College of New Jersey - School of Business ( email )

Ewing, NJ 08628-0718
United States

Jin Xu

Virginia Tech - Pamplin College of Business ( email )

Department of Finance
880 West Campus Dr
Blacksburg, VA 24061
United States

HOME PAGE: http://finance.pamplin.vt.edu/directory/xu.html

Ruiyao Zhu (Contact Author)

Virginia Tech - Pamplin College of Business ( email )

Department of Finance
880 West Campus Dr
Blacksburg, VA 24061
United States

HOME PAGE: http://finance.pamplin.vt.edu/about-us/directory/zhu-r.html

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