Corporate Governance, Innovation Incentives and Firm Performance: A Critical Synthesis of Empirical Research

Abstract

The relationship between corporate governance mechanisms, research and development (R&D) investment, and firm performance occupies a central but contested position in contemporary financial economics, accounting, and management research. This article provides a comprehensive narrative review of the empirical evidence, drawing primarily on peer-reviewed studies published between January 2015 and February 2026, supplemented by foundational earlier contributions that remain essential for contextualising current debates. Synthesising findings from more than sixty published studies, the review addresses five principal domains: board structure and composition; ownership and institutional investment patterns; executive compensation and chief executive officer characteristics; antitakeover provisions and the market for corporate control; and the performance implications of R&D investment. Consistent, if nuanced, evidence emerges that board independence, long-horizon institutional ownership, and equity-based managerial incentives generally support R&D investment and innovation output, whilst short-term-oriented ownership and weak intellectual property regimes tend to suppress innovative activity. R&D investment is broadly positively associated with market valuation and long-run performance, though this relationship is moderated by financing constraints, institutional context, and investor composition. The article identifies persistent gaps relating to governance and innovation in emerging economies, digital sectors, and causal identification, and offers directions for future research.