The paper studies corporate governance characteristics in a panel of transition countries to investigate the relationship between the investment in intangible capital (specifically innovation) and corporate governance. We show that innovation is restricted by finance and the managerial attitude towards activities that support innovation. In case of financial restriction, softer innovation (process, marketing, organization) are more less impacted by the restriction and are also more common. Lack of managerial support to innovation results in less innovation, regardless of the type. We also show that external determinants, like the intensity of competition and international orientation, are related to innovation. The paper extends the knowledge about the link between corporate governance and intangible investment at large and in particular in transition countries. As such it provides useful implication at microeconomic as well as macroeconomic (developmental) level.