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Inventor Chief Executive Officers and Firm Innovation

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  • Ibrahim Bostan
  • G. Mujtaba Mian

Abstract

Using a novel, manually collected dataset, we find that firms whose chief executive officer (CEO) is an inventor experience significantly better innovation outcomes, as measured by patents and future citations. We obtain these results in models with firm fixed effects, in difference‐in‐difference analysis of transitioning CEOs that controls for the CEO fixed effects, and among firms with founder CEOs. Firms led by an inventor CEO also exhibit greater tolerance for failure as indicated by a greater number of both highly cited and uncited patents, and engage more in explorative search strategies that exploit new technological trajectories. Stock market, however, seems unable to fully capture the positive impact of inventor CEOs on future innovation: firms whose CEO transitions to be an inventor experience positive abnormal stock returns, especially during the early years following the transition.

Suggested Citation

  • Ibrahim Bostan & G. Mujtaba Mian, 2019. "Inventor Chief Executive Officers and Firm Innovation," International Review of Finance, International Review of Finance Ltd., vol. 19(2), pages 247-286, June.
    • Handle: RePEc:bla:irvfin:v:19:y:2019:i:2:p:247-286
    DOI: 10.1111/irfi.12266
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    Cited by:

    1. Hao, Ying & Huang, Yuxiu & Cui, Xuegang & Liu, Qiang & Zhang, Yuwen, 2021. "CEO experience and corporate financing decisions: Evidence from a natural experiment in China," China Economic Review, Elsevier, vol. 70(C).
    2. Qian Wang & Xiaojie Pei & Huigang Liang, 2022. "Founder CEO, CEO Characteristics, and Firm Innovation Efficiency: An Empirical Study of China’s GEM-Listed Companies," Sustainability, MDPI, vol. 14(14), pages 1-22, July.
    3. Byun, SeongK. & Fuller, Kathleen & Lin, Zhilu, 2021. "The costs and benefits associated with inventor CEOs," Journal of Corporate Finance, Elsevier, vol. 71(C).
    4. Lin, Zhilu & Patel, Pankaj & Oghazi, Pejvak, 2021. "The value of managerial ability and general ability for inventor CEOs," Journal of Business Research, Elsevier, vol. 135(C), pages 78-98.
    5. Wei, Yu & Nan, Haoxi & Wei, Guiwu, 2020. "The impact of employee welfare on innovation performance: Evidence from China's manufacturing corporations," International Journal of Production Economics, Elsevier, vol. 228(C).
    6. Guo, Chenhao & Ke, Yun & Zhang, Jinkang, 2023. "Digital transformation along the supply chain," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    7. Zhi-Guang Li & Yanrui Wu & Yao-Kuang Li, 2023. "Technical Founders, Digital Transformation and Corporate Technological Innovation: Empirical Evidence from Listed Companies in China’s STAR Market," Economics Discussion / Working Papers 23-03, The University of Western Australia, Department of Economics.
    8. Bostan, Ibrahim & Mian, G. Mujtaba, 2024. "Inventor CEOs and financing of innovation: Evidence from IPOs," Journal of Banking & Finance, Elsevier, vol. 164(C).
    9. Shui, Xiaolong & Zhang, Minhao & Smart, Palie & Ye, Fei, 2022. "Sustainable corporate governance for environmental innovation: A configurational analysis on board capital, CEO power and ownership structure," Journal of Business Research, Elsevier, vol. 149(C), pages 786-794.
    10. Zhi-Guang Li & Yanrui Wu & Yao-Kuang Li, 2024. "Technical founders, digital transformation and corporate technological innovation: empirical evidence from listed companies in China’s STAR market," International Entrepreneurship and Management Journal, Springer, vol. 20(4), pages 3155-3180, December.
    11. Bostan, Ibrahim & Lin, Ji-Chai & Mian, G. Mujtaba, 2024. "Do firms manage their share prices to mitigate investor short-termism?," Journal of Corporate Finance, Elsevier, vol. 84(C).

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