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Board independence, corruption and innovation. Some evidence on UK subsidiaries

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posted on 2023-06-09, 20:29 authored by Vania Sena, Meryem Duygun, Giuseppe Lubrano, Marianna MarraMarianna Marra, Mohamed Shaban
In this paper we test the hypothesis that independent boards can insulate a company from the detrimental impact of corruption on its performance (proxied by innovation). To this purpose, we have estimated an innovation production function that links innovation outputs to innovation input (namely investment in R&D) on a sample of manufacturing subsidiaries controlled by British multinationals and located in 30 countries. Our analysis covers the period 2005- 2013. After controlling for the subsidiary’s characteristics (including the ownership structure and whether the main shareholders are from Common Law countries), we find that independent boards may mitigate the negative impact of corruption on innovation as subsidiaries located in more corrupt countries and with more independent boards tend to invest more in R&D and register more valuable patents. These results still hold after controlling for the average age of the directors, the proportion of directors with no local business affiliations and government effectiveness.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Journal of Corporate Finance

ISSN

0929-1199

Publisher

Elsevier

Volume

50

Page range

22-43

Department affiliated with

  • Strategy and Marketing Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2020-02-03

First Open Access (FOA) Date

2020-02-03

First Compliant Deposit (FCD) Date

2020-02-03

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