Independent boards and innovation
Lee Fleming and
Journal of Financial Economics, 2017, vol. 123, issue 3, 536-557
Much research has suggested that independent boards of directors are more effective in reducing agency costs and improving firm governance. How they influence innovation is less clear. Relying on regulatory changes, we show that firms that transition to independent boards focus on more crowded and familiar areas of technology. They patent and claim more and receive more total future citations to their patents. However, the citation increase comes mainly from incremental patents in the middle of the citation distribution; the numbers of uncited and highly cited patents—arguably associated with riskier innovation strategies—do not change significantly.
Keywords: Corporate governance; Board composition; Innovation; Exploration and exploitation (search for similar items in EconPapers)
JEL-codes: G34 L14 L25 M21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:123:y:2017:i:3:p:536-557
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