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Does managerial ability facilitate corporate innovative success?

journal contribution
posted on 01.12.2015, 00:00 authored by Y Chen, Edward PodolskiEdward Podolski, M Veeraraghavan
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.

History

Journal

Journal of empirical finance

Volume

34

Pagination

313 - 326

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

0927-5398

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2015, Elsevier

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