Energy (in)security, CEO power, and corporate innovation

This paper studies the impact of energy security risk on corporate innovation and whether and how powerful chief executive officers (CEOs) influence such effects. Based on a sample of U.S. energy firms, the empirical findings suggest that energy security risk significantly impedes firms’ research and development (R&D) intensity, an effect that is more pronounced for firms with financial constraints. Eventually, reduced access to debt capital appears to be a potential channel mechanism. Firms with powerful CEOs innovate more in times of low energy security. The CEO-influence persists in the long run and remains resilient to using alternative proxies and matched samples. Powerful CEOs help enhance firm performance through such innovative efforts following years of high energy insecurity.