Mediating Role of Innovation Capacity in the Relationship between Corporate governance and Firm Performance: evidence from Chinese listed firms
Author (s)
Tolossa Fufa Gulema & Zhou Xiaoyan
Abstract
This study examined the potential mediating role of innovation capacity of firm measured by innovation investment in between the relationships of corporate governance and firm performance. The study used panel data of 11,634 samples of Chinese listed firms covering from 2010-2018. We operationalized corporate governance into board independence, dual leadership, concentrated ownership, debt finance, and product market competition. The study found to support the mediation role of innovation investment in between most corporate governance mechanisms and firm performance measured by Tobin’s Q. Specifically, we found that innovation investment has been fully mediated the relationship between concentrated ownership structure and firm performance, Similarly, corporate governance measured by debt financing, and product market competition were partially mediated by innovation investment in Chinese listed firms. The study makes an important contribution to corporate governance practice in emerging economies policymakers and managers by providing comprehensive empirical evidence on how corporate governance practices are related to firm performance through innovation activities. Firms in emerging countries should maintain high ownership concentration, improve the debt financing system and encourage product market competition to improve firm performance through innovation activities.
Keywords: Corporate governance, Innovation capacity, Firm performance, emerging market.
| Title: | Mediating Role of Innovation Capacity in the Relationship between Corporate governance and Firm Performance: evidence from Chinese listed firms |
|---|---|
| Author: | Tolossa Fufa Gulema & Zhou Xiaoyan |
| Journal Name: | International Journal of Science and Business |
| Website: | ijsab.com |
| ISSN: | ISSN 2520-4750 (Online), ISSN 2521-3040 (Print) |
| DOI: | https://doi.org/10.5281/zenodo.4548144 |
| Media: | Online |
| Volume: | 5 |
| Issue: | 4 |
| Acceptance Date: | 09/02/2021 |
| Date of Publication: | 18/02/2021 |
| PDF URL: | https://ijsab.com/wp-content/uploads/708.pdf |
| Free download: | Available |
| Page: | 105-122 |
| First Page: | 105 |
| Last Page: | 122 |
| Paper Type: | Research Paper |
| Current Status: | Published |
Cite This Article:
Tolossa Fufa Gulema & Zhou Xiaoyan (2021). Mediating Role of Innovation Capacity in the Relationship between Corporate governance and Firm Performance: evidence from Chinese listed firms. International Journal of Science and Business, 5(4), 105-122. doi: https://doi.org/ 10.5281/zenodo.4548144
Retrieved from https://ijsab.com/wp-content/uploads/708.pdf
About Author (s)
Tolossa Fufa Gulema(corresponding author), PhD Scholar, School of Business, University of International Business and Economics, Beijing, 100029, China. Email: gulma19@yahoo.com
Zhou Xiaoyan, School of Business, University of International Business and Economics, Beijing, 100029, China.