Abstract: This paper explores the influences of managerial ownership on firms’ innovation efficiency. Using the sample of China’s listed firms for the period 2003-2014, this study finds that managerial ownership promotes the firms’ innovation efficiency. Specifically, we find that firms with higher managerial ownership achieve greater innovative success for given research and development expenditures. In addition, we find that the impact of managerial ownership on innovation efficiency is more pronounced for firms with lower agency cost.

Key words: managerial ownership, technological innovation, efficiency, agency cost