Journal of Applied Finance & Banking

Engineer CEOs and Corporate Innovation

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• Abstract

   

  One-in-three CEOs of Chinese manufacturing firms are engineers. Firms led by CEOs with professional certifications in engineering, are associated with greater innovation quality, indicating that on-the-job training in engineering produces human capital which fosters innovation. In addition, firms with Engineer CEOs don’t spend more on R&D comparing to others, which argues against the “functionally biased perception theory”. The result is more pronounced when CEOs have senior-level professional certifications in engineering. Our main finding still holds when we apply an instrumental variable approach. Finally, we also show that Engineer CEOs have opposite impacts on innovation quality in high- and low-leverage firms.

   

  JEL classification numbers: O32, M11, M00

  Keywords: Engineer CEOs, Human Capital, Innovation.