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CEO organizational identification and corporate innovation investment

Author

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  • Dongying Du
  • Xiaojian Tang
  • Huaiming Wang
  • Joseph H. Zhang
  • Stephanie Tsui
  • Dongjie Lin

Abstract

Identity theory in economics reveals that organisational identification motivates managers to take actions that are strongly aligned with firm interests. Nevertheless, organisational identification may also play a role in personal incentives. Leveraging the availability of CEO organisational identification data from the national internal control survey of listed firms in China, we document a positive impact of CEO organisational identification on corporate innovation. We also find that the positive impact is more pronounced for firms whose CEOs own shares, that are followed by more financial analysts, and that have higher institutional ownership. Additional analyses suggest that the interaction between CEO organisational identification and corporate innovation investment significantly enhances firm value. Overall, our study shows that CEO organisational identification is a non‐trivial driver of firm innovation and growth.

Suggested Citation

  • Dongying Du & Xiaojian Tang & Huaiming Wang & Joseph H. Zhang & Stephanie Tsui & Dongjie Lin, 2022. "CEO organizational identification and corporate innovation investment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 4185-4217, September.
    • Handle: RePEc:bla:acctfi:v:62:y:2022:i:3:p:4185-4217
    DOI: 10.1111/acfi.12920
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