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Does the Level of Environmental Uncertainty Matter in the Effect of Returnee CEO on Innovation? Evidence from Panel Threshold Analysis

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  • Weili Huang

    (School of Economics and Management, Shaanxi University of Science and Technology, Shaanxi 710021, China)

  • Guangqi Ma

    (School of Economics and Management, Shaanxi University of Science and Technology, Shaanxi 710021, China)

  • Xuemeng Chen

    (School of Economics and Management, Shaanxi University of Science and Technology, Shaanxi 710021, China)

Abstract

This study applies a panel threshold regression model to reconcile the inconsistent findings about returnee chief executive officer (CEO) effects on enterprise innovation using the environmental uncertainty as the threshold variable and panel data from 187 publicly traded electronic firms in China for the period 2012–2016. The empirical results suggest that a significant double threshold effect does exist, showing an inverted-U correlation between returnee CEO and innovation. Specifically, a returnee CEO significantly promotes innovation at moderate levels of environmental uncertainty but significantly hinders innovation when the environmental uncertainty surpasses the larger threshold value, which contradicts much of the previous literature. This research enriches the scholarship on returnee CEOs and lays a theoretical foundation that firms can use in corporate governance. If firms pay more attention to environmental uncertainty while formulating new CEO introduction policies, substantial innovation ability can be improved at moderate levels of environmental uncertainty.

Suggested Citation

  • Weili Huang & Guangqi Ma & Xuemeng Chen, 2019. "Does the Level of Environmental Uncertainty Matter in the Effect of Returnee CEO on Innovation? Evidence from Panel Threshold Analysis," Sustainability, MDPI, vol. 11(9), pages 1-16, May.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:9:p:2645-:d:229415
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    2. Fei Hou & Fangnan Liao & Jie Liu & Hao Xiong, 2019. "Signing Auditors’ Foreign Experience and Debt Financing Costs: Evidence for Sustainability of Chinese Listed Companies," Sustainability, MDPI, vol. 11(23), pages 1-19, November.

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