Academics as Independent Directors: Do They Contribute to Environmental Innovation

Abstract

Building on agency theory and the literature on independent directors, this research investigates the effects of independent directors with academic backgrounds on environmental innovation. We make the argument that the independent academic directors as an internal mechanism, can make contributions to corporate environmental technological innovation performance through monitoring, advising, and networking functions. We further suggest the positive effects of independent academic directors are contingent on financial constraints. Our findings report that the positive effects are amplified when firms have severe financial distress. Using a sample of Chinese listed companies, we find supportive evidence to our hypotheses.