The impact of market competition on the relation between CEO power and firm innovation

Shahbaz Sheikh

Journal of Multinational Financial Management, 2018, vol. 44, issue C, 36-50

Abstract: This study empirically investigates the effect of market competition on the relation between CEO power and firm innovation by explicitly recognizing the endogeneity of CEO power. Results from instrumental variable (IV-GMM) regressions indicate that powerful CEOs produce more patents and citations relative to other CEOs. However, the relation between CEO power and innovation is driven by competition in product markets, as CEO power has a positive and significant effect on innovation only in high competition markets, and is not related to innovation in low competition markets. Overall, the results suggest that product market competition plays an important role in mitigating agency problems, and forces CEOs to use their power in the best interests of the shareholders.

Keywords: Innovation; Patents; Citations; Power; CEO pay slice (search for similar items in EconPapers)
JEL-codes: G32 J31 J33 O30 O33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042444X17302104
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:44:y:2018:i:c:p:36-50

DOI: 10.1016/j.mulfin.2018.01.003

Access Statistics for this article

Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth

More articles in Journal of Multinational Financial Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().