Theory and Evidence from Firms and Nations
Edited by Mehmet Ugur
Chapter 4: Corporate governance and innovation in US-listed firms: the mediating effects of market concentration
With the exception of a few studies, the literature on the relationship between corporate governance (CG) and innovation tends to investigate only the partial effects of CG dimensions on innovation. The aim of this chapter is to contribute to the debate by analysing not only the relationship between CG and innovation, but also how market concentration and CG interact in their effects on innovation. The case for examining both partial and interactive effects can be summarized as follows: investment in research and development (R & D) is costly and associated with uncertain returns for shareholders and uncertain private benefits for managers. At a given level of market concentration within an industry, CG rules affect managers’ innovation effort by ameliorating or exacerbating the agency problem. However, the level of market concentration also affects the managers’ innovation effort by affecting the rates of pre-innovation and post-innovation profits. Given these dynamics, it is necessary to investigate not only the partial effects of CG and market concentration on R & D expenditures; but also the way in which CG rules and market structure interact and affect the level of R & D effort.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.