Do Golden Parachutes Spur Innovation in Concentrated-Ownership Corporations

Ke Wang*, Rachel Pownall, Cong Xia, Xiaorui Tang

*Corresponding author for this work

Research output: Working paper / PreprintWorking paper


This paper provides highly significant evidence that golden parachutes spur innovation in concentrated-ownership corporations and State-Owned-Enterprises (SOEs). Taking advantage of China's institutional features, we find that golden parachutes lead to higher levels of innovation quantity and quality through a risk-taking mechanism. The positive effects of parachutes on innovation are more pronounced when ownership concentration increases for SOEs, as well as when ownership concentration decreases for non-SOEs. We establish causality with two novel instrumental variables – executive lawyer alumni connection and law firm density around headquarter.
Original languageEnglish
Publication statusPublished - 12 Jan 2021

Publication series

SeriesSSRN Working papers

JEL classifications

  • g34 - "Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance"
  • g38 - Corporate Finance and Governance: Government Policy and Regulation
  • o31 - Innovation and Invention: Processes and Incentives
  • o32 - Management of Technological Innovation and R&D


  • innovation
  • golden parachute
  • Ownership concentration
  • SOEs


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