Friendly boards and innovation
Date of Issue2018
College of Business (Nanyang Business School)
We examine how friendly boards affect firm innovation. Using CEO-director social connections as a measure of board friendliness, we find that firms with friendly boards create more patents and citations. The positive relation between friendly boards and innovation are more pronounced when firms’ advisory needs are higher or when firms operate in innovative industries. Friendly boards are also associated with higher firm value, especially when firms have higher advisory needs or when innovation is an important source of firm value. Our results support the positive view on a friendly board perspective that directors serve as valuable advisors to CEOs.
Board Of Directors
Journal of Empirical Finance
© 2017 Elsevier B. V. All rights reserved. This paper was published in Journal of Empirical Finance and is made available with permission of Elsevier B. V.