The Research On The Influence Of Appointment-based CEO Connectedness On Corporate Innovation

In the history of human development,technology is a revolutionary and vital driving force that concerns the destiny and future of every nation and furthermore affects the international situation and the world landscape.In an era of uncertainty,perhaps only innovation can be the key to lead the global economic and business environment into a new phase of certainty.At the 20 th National Congress,General Secretary Xi Jinping once again reiterated the importance of science and technology innovation for China to achieve the national dream of the great rejuvenation of the Chinese nation.Unlike Western societies,the Chinese nation has attached importance to human relations since ancient times,and various relationships influence people’s lives and certainly have some impact on economic agents.It can be introduced that relationship,a non-institutional factor,can also have some influence on corporate innovation.Therefore,this paper takes the appointment-based internal connectedness between CEOs and executives as an entry point to provide a new perspective for studying corporate innovation.Based on theories such as principal-agent theory,this paper analyzes that the internal connectedness generated by the CEO through hiring executives stimulates the CEO’s need to bring fulfillment and dignity through work,focuses more on the long-term development of the firm,avoids opportunistic behavior,reduces surplus management,and improves the level of accounting information quality,which in turn promotes innovation investment.This study investigates the role of internal connectedness generated by hiring executives after the CEO takes office on the firm’s innovation investment,using a sample of SSE A-share listed companies from 2016—2021.The regression results show that appointment-based CEO connectedness has a catalytic effect on firms’ innovation investment.The results of the mechanism test indicate that accounting information quality plays a mediating role in the effect of CEO internal connectedness on firm innovation.After heterogeneity analysis by grouping,the empirical results show that the positive effect of appointmentbased CEO connectedness on innovation investment in large firms is more significant than that in small and medium-sized firms;CEO Duality have a more significant effect on innovation investment;among state-owned and non-stateowned firms,the promotion effect of appointment-based CEO connectedness on innovation investment in non-state-owned firms is more significant;the effect of appointment-based CEO connectedness on innovation investment is more significant in enterprises with low marketization level.The findings of this study show a new perspective for the study of the influencing factors and mechanisms of corporate innovation investment,and also provide a basis for listed companies to improve their corporate governance system and regulators to formulate corresponding policies.