No abstract

We find a positive association between disproportionate insider control and patent output, quality, creativity, and the efficient use of R&D in innovation. Managers of firms characterized by disproportionate control also take more personal innovative risk by filing their own patents. By controlling for standard entrenchment measures, we also find that insider entrenchment due to superior voting rights is distinct from entrenchment derived from standard antitakeover measures. Disproportionate insider control fosters innovation more than other forms of entrenchment. Positive effects are confined, however, to financially constrained firms and dissipate within ten years following the IPO. Dual class firms with financial constraints prefer to issue debt and are more likely to issue debt after collateralizing their patent portfolio. Our results, which control for self-selection bias by using a sample of dual and single class firms matched on their innovativeness pre-IPO, therefore support the recent call for sunset provisions on dual class shares.

No abstract

Prior studies suggest high institutional ownership provides stable funding for firm managers supporting long-term innovation. However, we hypothesize that the level of holdings can also proxy for institutional attention. We address this question and find that institutional distraction negatively impacts board monitoring and advisory support for management, reducing R&D, patent filings, citations and creativity.Distraction is concentrated in (1) firms owned by institutions providing low attention before the shock and (2) industries facing low substitute monitoring through competition. Distraction also affects information flow in firms facing high labour mobility and high peer firm innovation (technology spillovers).

We examine the impact of CEO marital status on firm innovative efficiency. We find that firms led by married CEOs produce 8% more patents and citations per unit of investment and generate more explorative patents. Married CEOs create a culture of tolerance among their employees that is conducive to risk taking, and their firms produce more efficient innovation (1) in regions that value social capital and (2) in firms that value favorable employee treatment. We find that the tolerant culture of married CEO firms produces more efficient innovation when occurring in tandem with mechanisms facilitating a long‐term strategic orientation.