Board Networks and Corporate Innovation

• 成果类型: Article
• 署名作者: Chang, Ching-Hung; Wu, Qingqing
• 署名单位: National Taiwan University; National Taiwan University; University System of Ohio; Xavier University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3587
• 发表日期: 2021
• 页码: 3618-3654
• 关键词: board networks; INNOVATION; DIRECTORS; monitoring; advising; External financing

摘要

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.