Inventor Chief Executive Officers and Firm Innovation* IBRAHIM BOSTAN AND G. MUJTABA MIAN College of Business, Zayed University, Dubai, United Arab Emirates ABSTRACT Using a novel, manually collected dataset, we find that firms whose chief executive officer (CEO) is an inventor experience significantly better innova- tion outcomes, as measured by patents and future citations. We obtain these results in models with firm fixed effects, in difference-in-difference analysis of transitioning CEOs that controls for the CEO fixed effects, and among firms with founder CEOs. Firms led by an inventor CEO also exhibit greater tolerance for failure as indicated by a greater number of both highly cited and uncited patents, and engage more in explorative search strategies that exploit new technological trajectories. Stock market, however, seems unable to fully capture the positive impact of inventor CEOs on future innovation: firms whose CEO transitions to be an inventor experience positive abnormal stock returns, especially during the early years following the transition. JEL Codes: G14; J24; O31; O32 Accepted: 16 March 2019 I. INTRODUCTION Inventor chief executive officers (CEOs) lead many large American companies. In January 2017, the combined market value of such firms exceeds 25% of the total market capitalization of New York Stock Exchange (NYSE). The examples include Jeffrey P. Bezos of Amazon, Lawrence Edward Page and Sergey Brin of Google, Hoyt M. Wells of Goodyear, Theodore W. Waitt of Gateway, Brian M. Krzanich, and Leslie L. Vadasz of Intel, Steven A. Ballmer of Microsoft, and Lawrence J. Ellison of Oracle, among many others. Despite the prevalence of inventor CEOs, their impact on firm performance has not been well under- stood. While the impact can be multifaceted, one area that is perhaps most prone to their influence is firm innovation. 1 In this paper, therefore, we study * We are grateful to Jarrad Harford, Serdar Dinc, Srinivasan Sankaraguruswamy, Yongtae Kim, and participants of seminar at Zayed University for helpful comments. Any remaining errors are solely our responsibility. 1 It is not uncommon to see the business press attributing the innovative success of large Amer- ican companies to the personal innovation prowess of their leaders. See, for example, Inven- tor as CEO—Good or Bad? by Rob Spiegel, Automation and Motion Control, July 9, 2015, and CEO By Day, Inventor at Night by George Anders, Forbes, July 16, 2012. © 2019 International Review of Finance Ltd. 2019 International Review of Finance, 2019 DOI: 10.1111/irfi.12266