How External CEOs Stimulate Innovation

60 Pages Posted: 22 Jan 2019

See all articles by Muhammad Kabir

Muhammad Kabir

University of New Brunswick - Saint John

Khalid Nainar

McMaster University - Michael G. DeGroote School of Business

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

Suggested Citation

Kabir, Muhammad and Nainar, S. M. Khalid, How External CEOs Stimulate Innovation (January 18, 2019). 2019 Canadian Academic Accounting Association (CAAA) Annual Conference, Available at SSRN: https://ssrn.com/abstract=3318697

Muhammad Kabir (Contact Author)

University of New Brunswick - Saint John ( email )

Saint John, Canada
Saint John, New Brunswick E2L 4L5
Canada

S. M. Khalid Nainar

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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