Corporate Governance and Innovation: Theory and Evidence

Sapra, Haresh; Subramanian, Ajay; Subramanian, Krishnamurthy

doi:10.1017/s002210901400060x

Cited by 197 publications

(51 citation statements)

References 44 publications

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“…Our use of patenting as a proxy for innovation activities has become standard in the innovation literature (e.g., Subramanian (2009), Hsu, Tian, andXu (2014), Acharya, Baghai, and Subramanian (2013), (2014), Chava, Oettl, Subramanian, and Subramanian (2013), Sapra, Subramanian, and Subramanian (2014), and Bloom et al (2016)). Moreover, the literature has shown that patents predict economic growth, aggregate stock market value, and firm profitability (Hsu (2009), Hirshleifer, Hsu, andLi (2013), and Kogan, Papanikolaou, Seru, and Stoffman (2017)), which supports our use of patent data to examine the real effects of policy and policy uncertainty.…”

Section: Introductionmentioning

confidence: 99%

What Affects Innovation More: Policy or Policy Uncertainty?

Bhattacharya¹,

Hsu²,

Tian³

et al. 2017

J. Financ. Quant. Anal.

408

160

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Motivated by a theoretical model, we examine for 43 countries whether it is policy or policy uncertainty that affects technological innovation more. Innovation activities, measured by patent-based proxies, are not, on average, affected by which policy is in place. Innovation activities, however, drop significantly during times of policy uncertainty measured by national elections. The drop is greater for more influential innovations (citations in the right tail, exploratory rather than exploitative innovations) and for innovation-intensive industries. We use close presidential elections and ethnic fractionalization to address endogeneity concerns. We uncover the mechanism underlying the main result by showing that the number of patenting inventors decreases with policy uncertainty. Political compromise, we conclude, encourages innovation.

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Section: Introductionmentioning

confidence: 99%

What Affects Innovation More: Policy or Policy Uncertainty?

Bhattacharya¹,

Hsu²,

Tian³

et al. 2017

J. Financ. Quant. Anal.

408

160

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show abstract

“…Sapra, Subramanian, and Subramanian (2013) develop a theoretical model and show a U-shaped relationship between innovation and takeover pressures. They also use the state-level antitakeover laws as the proxy for takeover.…”

mentioning

confidence: 99%

Do Anti-Takeover Provisions Spur Corporate Innovation?

Chemmanur

Tian

2012

SSRN Journal

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We study the relation between antitakeover provisions (ATPs) and corporate innovation, and show that ATPs affect firm value through a novel "innovation channel." We find that firms with a larger number of ATPs are more innovative. To establish causality, we use a regression discontinuity approach relying on "locally" exogenous variation in the number of ATPs generated by governance proposal votes that pass or fail by a small voter margin, as well as an instrumental variable approach. The evidence suggests that ATPs spur innovation and thus allow long-run value creation by insulating managers from short-term pressures arising from the equity market.

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“…For example, Bresman et al (1999) and Bena and Li (2014) show that home investment benefits from knowledge spillovers from cross-border M&A activity. Further, M&As are found to increase productivity (e.g., Devos et al (2009)), management efficiency (e.g., Manne (1965), Wang and Xie (2009)), discipline (e.g., Sapra et al (2014), Scharfstein (1988) and innovation (e.g., Stiebale (2016)). Thus, in a mid-or long-term calculation, tax revenue losses should (at least partially) be compensated by additional tax revenue gains through increasing inbound in-vestment and increasing earnings in the residence country.…”

Section: Tax Policy Implicationsmentioning

confidence: 99%

“…Such a strong position is in the interest of a national tax policy maker due to positive spillovers of cross-border M&A activity to the MNE's residence country (e.g., Manne (1965), Scharfstein (1988), Bresman et al (1999), Devos et al (2009), Wang and Xie (2009), Bena and Li (2014), Sapra et al (2014), Stiebale (2016)). In addition, it is in a country's interest to strengthen the position of its MNEs as buyers in cross-border M&A because the range of suitable targets is limited for operational reasons (e.g., specific intellectual property that can be acquired).…”

Section: Introductionmentioning

confidence: 99%

International Taxation and M&A Prices

Hagen

Pönnighaus

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. http://ftp.zew.de/pub/zew-docs/dp/dp17040.pdf Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar. Terms of use: Documents inDis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract: We show that corporate taxation systems regarding foreign dividends and capital gains across 49 countries differ in many aspects, contradicting the requirements for capital ownership neutrality and indicating that ownership patterns are distorted. Consequently, a national tax policy maker may ask which taxation system improves the position of its multinational entreprises in bidding for foreign targets. To address this question, we develop a theoretical model on the impact of foreign dividends and capital gains taxation on cross-border M&A prices from the acquirer's perspective and theoretically compare different taxation systems. In a next step, we empirically validate our model in a regression analysis on a large cross-border M&A data set. Based on this analysis, we find that foreign dividends taxation rather than capital gains taxation impacts M&A prices. Finally, we provide tax policy suggestions. International Taxation and M&A Prices

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Corporate Governance and Innovation: Theory and Evidence

Cited by 197 publications

References 44 publications

What Affects Innovation More: Policy or Policy Uncertainty?

What Affects Innovation More: Policy or Policy Uncertainty?

Do Anti-Takeover Provisions Spur Corporate Innovation?

International Taxation and M&A Prices

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