ترجمه مقاله نقش ضروری ارتباطات 6G با چشم انداز صنعت 4.0
- مبلغ: ۸۶,۰۰۰ تومان
ترجمه مقاله پایداری توسعه شهری، تعدیل ساختار صنعتی و کارایی کاربری زمین
- مبلغ: ۹۱,۰۰۰ تومان
Abstract
Using panel data on U.S. public firms, we document a positive effect of board independence on corporate innovation. This effect is concentrated in firms that are larger in size, in the non-technical industries, facing less product market competition, and using more debt, where managers are more likely to be excessively risk averse. We establish causality of board independence on innovation using a differencein-difference approach that exploits an exogenous shock to board composition, namely, the mandate of a majority of outside directors on company boards by NYSE and NASDAQ in response to the passage of Sarbanes-Oxley Act in 2002. We further examine incentive compensation as a possible mechanism. We show that firms with more independent boards use more equity-based compensation, especially stock options, to promote managerial risk-taking.
Conclusion
In this paper, we investigate the effect of board independence on firms’ innovation. Following recent studies, we measure innovation as the number of patents and citations, and board independence by the fraction of outside directors. Using a sample of public firms from 1996-2007, we document a positive relationship between board independence and innovation, indicating board independence in general fosters innovation. We address the potential endogeneity of board composition by utilizing an exogenous shock to firm’s board structure caused by the Sarbanes-Oxley Act as a quasi-natural experiment: in 2003, the NYSE and the NASDAQ issued new listing requirements that mandated a majority of independent directors for all firms listed on the exchanges. Firms previously not compliant with this rule are forced to increase the representation of outside directors, leading to an exogenous increase in board independence. Our empirical framework is a difference-in-difference approach that compares innovative outputs before and after the forced increase in board independence for non-compliant firms, with those that had already had a majority of outside directors in place as a control group. This exercise confirms our main results.