Does managerial ability facilitate corporate innovative success?

Yangyang Chen, Edward Podolski-Boczar, Madhu Veeraraghavan

    Research output: Contribution to journalArticleResearchpeer-review

    29 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 - 2015

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