Financial reporting quality and corporate innovation

Park, KoEun

doi:10.1111/jbfa.12317

Cited by 46 publications

(30 citation statements)

References 105 publications

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“…Firms whose CEOs have “general managerial skills” (Custódio, Ferreira, & Matos, ), firms with “sensation‐seeking” CEOs (Sunder, Sunder, & Zhang, ), and firms with narcissistic CEOs (Ham et al., ) are more innovative. Similarly, firms with more convex CEO compensation (Faurel, Li, Shanthikumar, & Teoh, ), firms with higher hedge fund ownership (Wang & Zhao, ), firms that grant high levels of stock options to non‐executive employees (Chang et al., ), and firms with higher levels of financial reporting quality (Park, ) are more innovative. Flammer and Kacperczyk () find that firms incorporated in states that have adopted a constituency statute have greater levels of innovation, especially for firms operating in consumer‐focused industries.…”

Section: Prior Research and Development Of Hypothesesmentioning

confidence: 99%

“…Because such a focus is also necessary to implement a successful CSR strategy (Jensen, ), we hypothesize that firms with higher levels of CSR are more likely to sustain the innovation process. Following prior research (Amore, Schneider, & Zaldokas, ; Chang et al., ; He and Tian ; Kogan, Papanikolaou, Seru, & Stoffman, ; Nanda & Rhodes‐Kropf, ; Park, ), we measure unambiguous outputs of the innovation process: the number of patents a firm holds, the number of new patents it generates, and the number of future citations associated with those patents.…”

Section: Introductionmentioning

confidence: 99%

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The influence of corporate social responsibility on investment efficiency and innovation

Cook

Romi

Sánchez

et al. 2019

Business Fin & Account

179

104

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We examine two important channels through which corporate social responsibility (CSR) affects firm value: investment efficiency and innovation. We find that firms with higher CSR performance invest more efficiently: these firms are less prone to invest in negative net present value (NPV) projects (overinvestment) and less prone to forego positive NPV projects (underinvestment). We also find that firms with higher CSR performance generate more patents and patent citations. Mediation analysis indicates that firms with higher CSR performance are more profitable and valuable, consequences partially attributable to efficient investments and innovation. These results, robust to alternate model specifications, lend support to enlightened stakeholder theory. K E Y W O R D Scorporate social responsibility, firm performance, innovation, investment efficiency, mediation ory. Porter and Kramer (2011) refer to a similar strategy as shared value creation. We refer to enlightened stakeholder theory throughout the paper to remain consistent and attribute this terminology to the similar ideas proposed by both sets of authors. 494

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Section: Prior Research and Development Of Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The influence of corporate social responsibility on investment efficiency and innovation

Cook

Romi

Sánchez

et al. 2019

Business Fin & Account

179

104

View full text Add to dashboard Cite

show abstract

“…We incorporate additional control variables in our analysis to address the concern that the relation between innovation and IIQ is driven by factors that are correlated with both. First, we control for accruals quality as accruals quality and IIQ are likely to be positively correlated and prior research shows that external reporting quality affects firm innovation through reduced information asymmetry between shareholders and managers (Park, 2018; Zhong, 2018). Second, we control for proxies for corporate governance, managerial career risk, and managerial ability that can impact innovation and IIQ, including transient and dedicated institutional ownership, stock liquidity, takeover pressure, managerial ownership, and CEO's total compensation (Aghion et al., 2013; Atanassov, 2013; Fang et al., 2014).…”

Section: Resultsmentioning

confidence: 99%

“…This transparency shields managers from undue career risks and promotes more efficient allocation of R&D capital. Park (2018) documents that accruals‐based external financial reporting quality is positively associated with future innovation.…”

Section: Related Literature and Hypotheses Developmentmentioning

confidence: 99%

Internal information quality and patent‐related innovation

Huang

Lao

McPhee

2020

Business Fin & Account

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This study investigates how the quality of information available within a firm affects patent-related innovative activities. Relying on recent theoretical and empirical research, we use externally observable information attributes to proxy for the quality of internal information. Our empirical results indicate that firms with higher internal information quality generate more patents and patent citations.Cross-sectional analyses show that this positive effect is greater when firms are susceptible to greater internal information frictions due to firm decentralization, short management team tenure, and long product development cycles. We also document that firms experience an increase in patents and patent citations following an improvement of internal information quality proxied by internal control weakness remediation. Overall, our results suggest that the positive relation between internal information quality and task performance extends to patent-related innovation, a non-routine type of task that may rely on information originating from sources other than firms' formal internal information systems. K E Y W O R D S coordination, internal information quality, patent-related innovation, uncertainty J E L C O D E S M41, D8, O32

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“…Bhattacharya & Ritter (1983) pointed that firms engaged in innovation would take advantage of patent as their signal in capital market to show their high quality. The research of Park (2015) also shows that those engaged in innovation will provide better financial reports so that information asymmetry can be reduced.…”

Section: Research Hypothesismentioning

confidence: 99%

Can Corporate Innovation Restrain the Stock Price Crash Risk?

Zhou¹,

Pan²

2018

JFRM

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Preventing the crash of stock prices and guaranteeing the steady of the capital market have become a significant issue when the strong supervision of financial risk becomes a consensus. Taking the A-share listed companies as research sample, this paper takes the enterprise innovation behavior into analysis framework of the stock price crash risk, and the study found that corporate innovation can curb the crash risk of stock price effectively, especially in the firm facing with strong financing constraints and the information transparency is equivocal. The research in this paper provides a new idea for the market value management of listed companies, and it also helps to control financial risks, maintain capital market stability; more importantly, it enriches the existing literature.

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Financial reporting quality and corporate innovation

Cited by 46 publications

References 105 publications

The influence of corporate social responsibility on investment efficiency and innovation

The influence of corporate social responsibility on investment efficiency and innovation

Internal information quality and patent‐related innovation

Can Corporate Innovation Restrain the Stock Price Crash Risk?

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