scholarly journals Misvaluation and Corporate Inventiveness

2020 ◽  
pp. 1-29
Author(s):  
Ming Dong ◽  
David Hirshleifer ◽  
Siew Hong Teoh
Keyword(s):  
Research And Development ◽  
Social Value ◽  
Equity Issuance ◽  
Corporate Innovation ◽  
Citation Counts ◽  
Innovative Output

Abstract We test how market overvaluation affects corporate innovation. Estimated stock overvaluation is strongly associated with measures of innovative inventiveness (novelty, originality, and scope), as well as research and development (R&D) and innovative output (patent and citation counts). Misvaluation affects R&D more via a nonequity channel than via equity issuance. The sensitivity of innovative inventiveness to misvaluation increases with share turnover and overvaluation. The frequency of exceptionally high innovative inputs/outputs increases with overvaluation. This evidence suggests that market overvaluation may generate social value by increasing innovative output and encouraging firms to engage in “moon shots.”

The Exploratory Mindset and Corporate Innovation

2020 ◽  
pp. 1-43
Author(s):  
Zhaozhao He ◽  
David Hirshleifer
Keyword(s):  
Research And Development ◽  
Chief Executive Officer ◽  
Stock Prices ◽  
Operating Performance ◽  
Chief Executive ◽  
Market Reactions ◽  
Managerial Incentive ◽  
Corporate Innovation ◽  
Long Run

Abstract We propose that chief executive officer (CEO) exploratory mindset (inherent desire to search for novel ideas and long-term orientation) promotes innovation. Firms with CEOs with PhD degrees (PhD CEOs) produce more exploratory patents with greater novelty, generality, and originality. PhD CEOs engage less in managing earnings and stock prices, invest more in research and development (R&D) and alliances, generate higher long-term value of patents, and experience more positive market reactions to R&D alliances. Their firms achieve superior long-run operating performance. They tend to be hired by research-intensive firms with poor financial performance. Evidence from managerial incentive shocks and turnovers suggests that these effects do not derive solely from CEO–firm matching.

A Text-Based Analysis of Corporate Innovation

2020 ◽  
Author(s):  
Gustaf Bellstam ◽  
Sanjai Bhagat ◽  
J. Anthony Cookson
Keyword(s):  
Firm Performance ◽  
Research And Development ◽  
Business Practices ◽  
Growth Opportunities ◽  
Novel Technologies ◽  
Corporate Innovation ◽  
Innovative Firms

We develop a new measure of innovation using the text of analyst reports of S&P 500 firms. Our text-based measure gives a useful description of innovation by firms with and without patenting and R&D (research and development). For nonpatenting firms, the measure identifies innovative firms that adopt novel technologies and innovative business practices (e.g., Walmart’s cross-geography logistics). For patenting firms, the text-based measure strongly correlates with valuable patents, which likely capture true innovation. The text-based measure robustly forecasts greater firm performance and growth opportunities for up to four years, and these value implications hold just as strongly for innovative nonpatenting firms. This paper was accepted by Gustavo Manso, finance.

scholarly journals Ustawa o niektórych formach wspierania działalności innowacyjnej - narzędziem aktywizacji gospodarczej

2007 ◽  
Vol 3 ◽  
pp. 233-237
Author(s):  
Wanda Klepacka ◽  
Ilona Pietucha
Keyword(s):  
Research And Development ◽  
Technological Transformation ◽  
Knowledge Based ◽  
Corporate Innovation ◽  
Knowledge Based Economy ◽  
Public Resources ◽  
Key Factor ◽  
Polish Economy ◽  
Innovation Processes ◽  
Stimulation Of

Development of Knowledge-Based Economy (KBE) depends on numerous factors and the most important is the cultural and organizational/technological transformation of the economy. The key factor in creating KBE in Poland is the stimulation of corporate innovation. One of the actions aimed for enhancing innovation in Polish economy is the enactment of regulations that facilite the development of small and medium-sized businesses.  On July 29th, 2005, Polish Sejm passed the Act on Certain Forms of Support for Innovative Activities (Dz.U. Nr 179, poz. 1484). Its main goals are: first, to stimulate economic competitiveness and innovation by raising expenditures of private sector on research and development, and second, to increase the effectiveness of managing public resources allotted for research and development. The Act is designed to encourage entrepreneurs to coparticipate in stimulating innovation processes in Polish economy by taking part in funding and realization of scientific research.

Shareholder Litigation and Corporate Innovation

2020 ◽  
Author(s):  
Chen Lin ◽  
Sibo Liu ◽  
Gustavo Manso
Keyword(s):  
Research And Development ◽  
External Pressure ◽  
Litigation Risk ◽  
Matched Sample ◽  
Difference In Differences ◽  
Patent Value ◽  
Innovation Activities ◽  
Corporate Innovation ◽  
Shareholder Litigation ◽  
New Knowledge

We investigate whether and to what extent shareholder litigation shapes corporate innovation by examining the staggered adoption of universal demand laws in 23 states from 1989 to 2005. These laws impose obstacles against shareholders filing derivative lawsuits, thereby significantly reducing managers’ litigation risk. Using a difference-in-differences design and a matched sample, we find that, following the passage of the laws, firms invested more in research and development, produced more patents in new technological classes and more patents based on new knowledge, generated more patents with significant impacts, and achieved higher patent value. Our findings suggest that the external pressure imposed by shareholder litigation discourages managers from engaging in explorative innovation activities. This paper was accepted by David Simchi-Levi, finance.

Can directors' liability reduction promote corporate innovation?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sanghak Choi ◽  
Hail Jung
Keyword(s):  
Regression Analysis ◽  
South Korea ◽  
Research And Development ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Content Type ◽  
Corporate Innovation ◽  
Development Expenditure ◽  
Innovation Strategies ◽  
Director Liability

PurposeThis study aims to explore the effects of director liability reduction (DLR) laws on corporate innovation strategies in South Korea.Design/methodology/approachRegression analysis is used to investigate the effects of the directors' liability reduction coverage on the corporate innovation. The data includes 7,517 firm-year observations spanning from 2011 to 2017.FindingsThe authors provide empirical evidence that directors feel protected by the coverage and are able to focus more on innovative projects. Using research and development expenditure and the number of patents registered to measure the firm's innovation, we find that covered firms spend more on R&D and register more patents than non-covered firms.Originality/valueThis study extends the literature on corporate innovation. A vast amount of literature empirically tests how best to motivate directors to engage in innovative activities. On the same line, this study is the first to empirically test the effect of DLR shelters on directors' motivations toward innovation.

scholarly journals Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

2021 ◽  
Vol 13 (9) ◽  
pp. 5044
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Innovation Activity ◽  
Board Members ◽  
Publicly Traded ◽  
Family Control ◽  
Corporate Innovation ◽  
Main Bank ◽  
Publicly Traded Firms

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

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