Does managerial ability facilitate corporate innovative success?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)313-326
Journal / PublicationJournal of Empirical Finance
Volume34
Online published21 Aug 2015
Publication statusPublished - Dec 2015
Externally publishedYes

Abstract

This paper examines whether managerial ability facilitates corporate innovative success. First, we show that managerial ability is positively associated with innovative output. Second, we show that the positive association between managerial ability and innovative output is weaker for older CEOs and managers who stay in the same job for longer, suggesting a preference for a ‘quiet life’ by long serving CEOs. Third, we find that the equity market values patents generated by more able managers more positively, suggesting that equity holders deem better skilled managers more effective at converting innovative ideas into valuable new products. Finally, we show that managerial ability is positively associated with more ‘radical’ innovations, which are outside of the firm's knowledge base. Overall, our results suggest that managerial ability is an essential component of corporate innovative success.

Research Area(s)

  • Managerial ability, Corporate innovation, Patents, Citations

Citation Format(s)

Does managerial ability facilitate corporate innovative success? / Chen, Yangyang; Podolski, Edward J.; Veeraraghavan, Madhu.

In: Journal of Empirical Finance, Vol. 34, 12.2015, p. 313-326.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review