CORPORATE INNOVATION AND CORPORATE GOVERNANCE: A STUDY OF U.S. FIRMS

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Abstract

The paper relates corporate governance to firm’s total factor productivity growth of U.S. firms from 1990 to 2004. Given technological constraints, some firms are very efficient whereas others are not and some firms have much faster rates of innovation and productivity growth than others. Are these differences due to chance or are there some factors contributing to higher total factor productivity growth? In this paper, we find evidence that firms with stronger shareholder rights have higher total factor productivity growth. By employing the governance index compiled by Gompers, Ishii, and Metrick (2003), we determine that the effect of governance on productivity varies positively with the quality of corporate governance. Furthermore, this relationship is strongest among firms which have the strongest shareholder rights.

Keywords: Corporate Governance, Innovations, US Firms

How to cite this paper: Roychoudhury, S., & Egorov, A. V. (2009). Corporate innovation and corporate governance: A study of US firms. Corporate Ownership & Control, 6(3-3), 342-359. https://doi.org/10.22495/cocv6i3c3p1