No new tricks for old dogs? Old directors and innovation performance*

This paper examines whether old directors improve or impede corporate innovation performance, which is measured by patent citations. We find that the U.S. listed firms with a higher percentage of old directors tend to be more engaged in innovation activities. After adopting the sudden deaths and unexpected retirements of old directors to address potential endogeneity issue, our results remain robust. Our results support the failure tolerance hypothesis that firms with old directors, who are more experienced, are more tolerant of failure in innovation activities, resulting in superior innovation performance. We further find that the positive impact of older directors on innovation is stronger for firms with less experienced board members, low meeting frequency of boards, lower institutional ownership, CEO duality, and/or a less competitive product market.