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.
|Publication status||Published - 12 Jan 2021|
|Series||SSRN Working papers|
- 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
- golden parachute
- Ownership concentration