The Dark Side of International Governance Reforms -Evidence from Corporate Innovation

摘要

This study examines the impact of governance reforms on corporate innovation across 58 countries. We find that both the quantity and quality of innovation decline after board reforms, especially in explorative patents, suggesting that, in the context of these reforms, firms are more likely to focus on existing knowledge rather than exploring new ideas. The decline is stronger in countries with rule-based reforms, competitive industries, or high operational uncertainty. This supports the idea that stricter governance can lead to short-term thinking, which limits risky, long-term innovation. Our findings highlight the potential negative effects of international governance reforms on innovation.