Firm innovation and ultimate control mechanism: Case of emerging market

Ruqia Shaikh, Zhiqiang Li, Xiaoli Wang and Muhammad Rizwan Nazir

Managerial and Decision Economics, 2022, vol. 43, issue 2, 440-456

Abstract: This study analyzes the effect of control enhancing mechanisms (CEMs) on a firm's innovation activities. In the light of conflicting theoretical prophecies on the role of ultimate control, we analyze the ownership concentration by examining the cash flow and control rights deviation which embolden ultimate owners to expropriate. Empirical evidence suggests that CEMs have a negative effect on core and base innovation, although the effect is severe in intermediate aged firms and largest sized firms. These findings are robust in different specifications and have significant implications for policymakers.

Date: 2022
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https://doi.org/10.1002/mde.3392

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:2:p:440-456

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