Does managerial ability facilitate corporate innovative success?

Yangyang Chen, Edward J. Podolski, Madhu Veeraraghavan

Research output: Journal article publicationJournal articleAcademic researchpeer-review

39 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)313-326
Number of pages14
JournalJournal of Empirical Finance
Volume34
DOIs
Publication statusPublished - 1 Dec 2015

Keywords

  • Citations
  • Corporate innovation
  • G30
  • M12
  • Managerial ability
  • O31
  • Patents

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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