Corporate ownership and firm performance: a mediating role of innovation efficiency

Using data from companies in Taiwan's electronics industry, this study examines the effect of corporate ownership on firm innovation efficiency and performance. We use a network-typed data envelopment analysis (DEA) approach to calculate firm-level innovation efficiency, which is composed of the R&D efficiency and the commercialization efficiency, respectively. We find that overall innovation efficiency is positively correlated with institutional ownership and directors' ownership. In addition, R&D efficiency is positively associated with ROA and commercialization efficiency positively correlates with Tobin's Q. R&D efficiency partially mediates the relationship between ownership-control deviation and ROA. However, commercialization efficiency plays a mediating role for institutional ownership on a firm's Tobin's Q. Our findings point to a bright side of the role of corporate governance in terms of its effects on corporate innovation and the effects of such innovation, in turn, on firm performance.