Corporate governance and innovation investment in publicly listed firms: the moderating effect of ownership type and legal jurisdiction

Purpose: This paper examines the effect of corporate governance on innovation investment, with consideration of ownership types and legal jurisdictions.
Design/methodology/approach: Our empirical analysis is based on a sample of publicly listed family businesses from the top 500 list worldwide matched with non-family counterparts from 2009 to 2018. The study uses a holistic measure of corporate governance to mitigate the conflicting impact of individual corporate governance components found in prior studies. This measure is applied to examine the moderating role of firm ownership type and legal jurisdiction.
Findings: Our results demonstrate that corporate governance positively influences innovation investment. This positive relationship is more pronounced in family businesses than in non-family businesses and is more prevalent in civil law economies than in common law economies.
Originality/value: The study holistically examines the effect of corporate governance, capturing the combination of all individual governance mechanisms and their influence on innovation investment. It further shows that comprehensive corporate governance has diverse impacts on innovation investment when considering family control and legal jurisdiction.