ORIGINAL ARTICLE
The bright side of co-opted boards: Evidence from firm innovation
Lily Nguyen,
Le Vu,
Xiangkang Yin,
Lily Nguyen
School of Business, the University of Queensland, Brisbane, Queensland, Australia
Search for more papers by this authorCorresponding Author
Le Vu
Centre for Global Business, Monash Business School, Monash University, Clayton, Victoria, Australia
Correspondence
Le Vu, Centre for Global Business, Monash Business School, Monash University, Clayton, VIC 3800, Australia.
Email: le.vu@monash.edu
Search for more papers by this authorXiangkang Yin
Department of Finance, Deakin Business School, Deakin University, Burwood, Victoria, Australia
Search for more papers by this authorLily Nguyen,
Le Vu,
Xiangkang Yin,
Lily Nguyen
School of Business, the University of Queensland, Brisbane, Queensland, Australia
Search for more papers by this authorCorresponding Author
Le Vu
Centre for Global Business, Monash Business School, Monash University, Clayton, Victoria, Australia
Correspondence
Le Vu, Centre for Global Business, Monash Business School, Monash University, Clayton, VIC 3800, Australia.
Email: le.vu@monash.edu
Search for more papers by this authorXiangkang Yin
Department of Finance, Deakin Business School, Deakin University, Burwood, Victoria, Australia
Search for more papers by this authorAbstract
This study documents a positive and robust effect of co-opted boards on firm innovation. This effect is mainly driven by co-opted independent directors. Firms with more co-opted independent directors are associated with lower sensitivities of CEO pay and turnover to performance. It suggests that co-opted boards promote innovation by insulating managers’ career concerns from innovation risk and supporting incentive contracts that motivate innovation. Overall, our study provides new evidence on co-opted boards benefiting firm innovation.
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