1,720,977 research outputs found
Patents do not measure innovation success
No full textWe find that a company’s patent filings and citations are not good measures of R&D success or failure, even when compared to firms in the same industry. Instead, our analysis reveals that patent counts reflect the firm’s mix of product and process innovation. Intuitively, competitor infringements of process innovation are difficult to detect, suggesting these innovations are better protected via trade secret than patents. We document that non-patenting firms frequently announce valuable new products, even though they emphasize process over product innovation. Insider trading in non-patenting firms generates positive excess returns, while such activity in patenting firms yields ordinary returns. The Uniform Trade Secrets Act induced firms to switch from patenting to non-patenting, leading to lower analysts and institutional following. Financial intermediaries potentially influence the disclosure of innovation rather than research and development success (Aghion et al., 2013; Bena et al., 2017). Overall, our tests indicate that patents and citations signify the nature of innovation rather R&D success
Disregarding the shoulders of giants: inferences from innovation research
Get PDFStudies proposing new determinants of corporate innovation include previously identified factors in an ad-hoc manner. We find that only a sparse set of recently proposed innovation determinants provide material, independent information about patents and citations. We document that inferences in recent empirical studies often change when we include previously discovered innovation determinants. Commonly-used econometric methods, including fixed effects and plausible shocks, do not always mitigate the need to condition on previously identified innovation determinants. Rather than randomly selecting a subset of control variables from prior studies, our analysis offers researchers a framework to consider variables previously proposed
Insider Trading in Supervised Industries
No full textWe investigate the impact of government agency oversight, such as by the Federal Reserve, on insider trading at the firm level. Regulatory supervision potentially limits trading based on material, nonpublic information, as it provides another layer of corporate governance to mitigate outflows of private information. Yet regulators themselves may serve as a source of information leakage, thereby facilitating insider-trading activity. We find, first, that in comparison to nonsupervised firms, supervised firms exhibit substantially greater trading based on inside information prior to earnings announcements. Second, in the first few days after firms provide private information to regulators or when regulators possess private information inaccessible to corporate insiders, these firms exhibit greater symptoms of insider trading. Finally, within a given supervised industry, insider-trading symptoms appear more pronounced when regulators exhibit greater leniency or operate in states with more political corruption. These insider-trading activities translate into over $1 billion in annual transfers
Director capital and corporate disclosure quality
No full text10.1016/j.jaccpubpol.2012.11.003Journal of Accounting and Public Policy324191-212JACP
Shadow trading
Get PDFWe investigate whether corporate insiders attempt to circumvent insider trading restrictions by using their private information to facilitate trading in economically linked firms, a phenomenon we call "shadow trading." Using measures of informed trading to proxy for shadow trading, we find increased levels of informed trading among business partners and competitors before a firm releases private information. To rule out alternative explanations, we examine two shocks to insiders' incentives to engage in shadow trading: High-profile regulatory enforcement against conventional insider trading, and staggered changes to their outside employment opportunities. Finally, we document attenuated levels of informed trading among business partners and competitors when firms prohibit shadow trading. Overall, we provide evidence that shadow trading is an undocumented and widespread mechanism that insiders use to avoid regulatory scrutiny
CEO Confidence and Unreported R&D
No full text We investigate whether managerial traits influence corporate decisions to provide mandatory financial disclosures. The results indicate that firms with confident chief executive officers (CEOs) are 24% more likely to report their research and development (R&D) expenditures relative to firms with cautious CEOs. Exploiting staggered, state-level regulatory shocks and changes in CEO type, we find substantial evidence that cautious CEO firms fail to report R&D expenditures. After a plausibly exogenous shock to managerial reporting liability, cautious CEO firms exhibit a 35% larger reduction in unreported R&D relative to confident CEO firms. Interestingly, confident CEO firms do not exhibit more innovation than their cautious CEO counterparts after taking into account their differing propensities to report corporate R&D. Overall, our analysis suggests that the precision or reliability of mandatory disclosures systematically varies with managerial characteristics. The Internet appendix is available at https://doi.org/10.1287/mnsc.2017.2809 . This paper was accepted by Amit Seru, finance. </jats:p
The Economics of Director Heterogeneity
No full textWe investigate the potential costs and benefits of firms constituting a heterogeneous pool of directors relative to more homogeneous boards. We measure director heterogeneity along six separate dimensions and divide board heterogeneity into occupational and social components. Our empirical analysis indicates that corporate complexity and managerial control exhibit significant influence on board heterogeneity. Using the heterogeneity of the county population of the firm's headquarters as an instrument, we also find that investors place valuation premiums on heterogeneous boards in complex firms but discount heterogeneity in less complex firms. Overall, our analysis indicates greater heterogeneity may not necessarily improve board efficacy
Family-controlled firms and informed trading: Evidence from short sales
No full text10.1111/j.1540-6261.2011.01714.xJournal of Finance671351-38
The efficacy of regulatory intervention: Evidence from the distribution of informed option trading
No full text10.1016/j.jbankfin.2013.07.037Journal of Banking and Finance37114337-4352JBFI
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