Ownership Concentration, CEO’s Technical Background and Enterprise Innovation

Abstract

From the perspective of enterprise innovation, this paper studies whether companies with higher ownership concentration are willing to hire a technology CEO. This paper studies the relationship between ownership concentration, CEO’s technical background, and enterprise innovation by taking private listed companies on small and medium-sized boards in Shenzhen Stock Market from 2011 to 2019 as research samples. The results show that CEO’s technical background promotes enterprise innovation. However, enterprises with higher ownership concentration are more willing to hire a non-technology CEO. Ownership concentration not only directly hinders enterprise innovation, but also indirectly hinders enterprise innovation by hindering the selection and recruitment of technical CEOs. Further research shows that under the condition of shareholding, technology CEOs significantly promote enterprise innovation, while under the condition of non-shareholding, technology CEOs have no significant impact on enterprise innovation. Without serving as chairmen, technical CEOs significantly promotes enterprise innovation, while serving as chairmen, technical CEOs have no significant impact on enterprise innovation. However, in the samples with high ownership concentration, there are significantly more companies where CEO serves as chairman and significantly fewer companies where CEO holds shares, which indicates that companies with high ownership concentration do not actively implement innovation incentive measures for CEOs. This study provides an important basis for Chinese private small and medium-sized enterprises to make innovative decisions in major shareholder governance and general manager selection.