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- Title
Board Networks and Corporate Innovation.
- Authors
Chang, Ching-Hung; Wu, Qingqing
- Abstract
This paper studies whether board connectedness affects corporate innovation. We find that well-connected boards have a positive effect on innovation activities and quality. The effect is stronger when firms have higher demand for advising or face more severe agency problems. Firms with greater needs for external finance benefit more from board connections with bankers. 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 under new exchange listing rules. Evidence indicates that types and relatedness of connections as well as director characteristics contribute to cross-sectional heterogeneity of the positive effect. This paper was accepted by Gustavo Manso, finance.
- Subjects
BOARDS of directors; SUPPLY &; demand; BANKERS; AGENCY costs
- Publication
Management Science, 2021, Vol 67, Issue 6, p3618
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2020.3587