Professor independent directors, marketization process and corporate innovation performance: empirical evidence from Chinese A-share listed companies

Purpose - Professor independent directors have been the subject of academic debate as to whether they can improve corporate innovation performance. Accordingly, this paper aims to investigate the relationship between professor independent directors, the marketization process and corporate innovation performance in China. Design/methodology/approach - Using a sample of Chinese A-share listed companies from 2014 to 2017, this study examines how professor independent directors and the (low and high) marketization process affect corporate innovation performance. Findings - The empirical analysis of this yields the following main results. First, enterprises with a higher proportion of professor independent directors outperform those with a low proportion of professor independent directors in terms of corporate innovation. Second, the study of introducing the marketization process finds that there is no “market failure”. Third, while professor independent directors have a significant association with innovation performance in the high-marketization group, this association is negligible in the low-marketization group, indicating that there is no “substitution effect”. Originality/value - This research provides empirical evidence to support the hiring of professors with relevant backgrounds as independent directors who can contribute meaningfully to corporate governance and innovation while also fostering industrial transformation. This study also identifies that the role of professor independent directors in facilitating corporate innovation is more effective in regions with a high degree of marketization than in regions with a low degree of marketization, implying that increasing marketization benefits the role of professor independent directors in facilitating corporate innovation.