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for their valuable comments. We also thank Xin Chang and Wenrui Zhang for sharing with us the non-executive stock option data. Po-Hsuan Hsu acknowledges the General Research Fund (GRF) sponsored by the Research Grants Council in Hong Kong (790913). All errors are our own.

This paper examines the role of local attitudes toward gambling on corporate innovative activity. Using a county's Catholics-to-Protestants ratio as a proxy for local gambling preferences, we find that firms located in gambling-prone areas tend to undertake riskier projects, spend more on innovation, and experience greater innovative output. We contrast the local gambling effect with chief executive officer (CEO) overconfidence, another behavioral effect reported to influence innovation. We find that local gambling preferences are a stronger determinant of innovative activity, with CEO overconfidence being more relevant to innovation in areas where gambling attitudes are strong.

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