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Accounting and Finance Department Research Seminar

When: Friday, November 19, 2021
10:00 AM - 11:15 AM
Where: > See description for location
Description: The Accounting and Finance Department announces the following research seminar.
Speaker: Associate Professor. Cheng (Jason) Jiang (Temple University)

Title: Lawyer CEOs and Corporate Innovation

Date: Friday, November 19, 2021
Time: 10:00-11:15 AM
Location: via Zoom Meeting
https://umassd.zoom.us/j/4387551509?pwd=bVB2QzdtRmFCdkk1WTVQSUxHMS9iQT09
Meeting ID: Contact Prof. Xu
Passcode: Contact Prof. Xu

Abstract: We examine whether CEOs with law education backgrounds (i.e., lawyer CEOs) exert a different influence on firm innovation relative to other CEO types. CEOs with legal backgrounds arguably enforce better compliance with governance, social and law norms than CEOs from other backgrounds, leading to a more risk-averse approach to business activities and thereby impeding corporate innovation. Consistent with this argument, we find that firms with lawyer CEOs are associated with worse innovation outcomes, measured by patents and citations. This finding is robust to alternative identification strategies, such as instrumental variable approach, coarsened exact matching, and falsification test. Using a cross-sectional analysis, we further find that the negative association between lawyer CEOs and corporate innovation is more pronounced when firm's litigation risk is higher. We also document the mechanism that lawyer CEOs spend less on R&D and capital expenditures and are more likely to underinvest than non-lawyer CEOs. A rich set of robustness tests are conducted to confirm the findings. To the best of our knowledge, we are the first to document empirical evidence for the long-standing concern expressed by early studies (e.g., Hayes and Abernathy 1980) that hiring CEOs with legal backgrounds decreases firms' commitment to innovation.

For additional information, please contact Prof. Hongkang Xu at hxu5@umassd.edu.
Contact: > See Description for contact information
Topical Areas: Faculty, Academic Affairs, Accounting and Finance, _Charlton College of Business