Dynamic impact of corporate governance on innovation: an advanced panel data estimation

The study investigates the impact of corporate governance on innovation intensity in three Asian innovation countries, namely, China, Japan and South Korea, using a sample of listed firms from 2010–2017. The cross-section dependence Pesaran (2004) test and slope homogeneity Pesaran and Yamagata (2008) test indicated the existence of cross-section dependence and slope heterogeneity among firms. The cointegration results of Westerlund (2007) confirmed the long-term connection between corporate governance and innovation. Additionally, the results from the Augmented Mean Group (AMG) show that innovation increases with the increase in corporate governance and the size of firms in the long run. Our key findings emphasise upgrading product innovation through appropriate policies for good corporate governance in order to attain long-run development.