How External CEOs Stimulate Innovation
60 Pages Posted: 22 Jan 2019
Date Written: January 18, 2019
Abstract
Using Inevitable Disclosure Doctrine (IDD) as an exogenous shock, we provide evidence of how external CEOs increase technology spillover and spur innovation. In particular, we examine two channels through which external CEOs can help boost innovation: technology spillover and income inequality. Our results show that external CEOs relative to internal CEOs increase both technology spillover and income inequality. Moreover, we find direct evidence linking the technology spillover with innovation. On the other hand, we do not find evidence to support that income inequality increases innovation. Our results remain substantially unchanged for alternative measures of technology spillover and identification strategies. We also find that CEO’s industry origin is an important factor. Specifically, CEOs from the same or similar industries drive the results. These findings add to our understanding on the link between CEO mobility and innovation and highlight an important channel through which the link works.
Keywords: CEO Mobility, Technology Spillover, Innovation
JEL Classification: D80, G30, J24, O31
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