Board Characteristics and Firm Innovations: Evidence From Chinese Listed Companies

Based on agency and resource dependency theory, I see the strong significance board of directors can have on a firm’s innovation. I focus on the Chinese listed state-owned enterprises, who are playing one of the most important roles in the Chinese economy. I use R&D intensity to measure the level of innovation with a sample of 3361 across 23 industries for the period 2011-2016. My results indicate that regardless of industry and government forms, there is no relationship between the board size, average board tenure and R&D intensity. On the other hand, an inverted U-shaped relationship was found between the board member age and R&D intensity. When it comes to the level of education, a positive relationship is found between members with Master’s degree and R&D intensity compared with a negative relationship of Bachelor’s degree. Lastly, a significant impact of independent directors and CEO duality on R&D intensity could be found but it is industry-specific. My findings contribute to the existing understanding of the role of the board of directors in strategic decision-making and as a result, it provides valuable insights both academically and practically.