Researchers have used patent counts, citation weighted patent counts, as well as research and development spending to measure innovation with, at times, conflicting results. We benchmark the validity of these innovation proxies using a novel data set of appraised tangible and intangible assets....

This paper analyzes a principal-agent-model with a principal, a manager, and a team of workers to investigate the incentive provision and optimal team size in a setting with uncertain productivity and team synergy effects which is typical for innovation environments. Workers are responsible for...

Management accountants who are preparing cash flow forecasts for capital budgeting decisions may have preferred conclusions that lead to motivated reasoning. Whereas previous research has mainly demonstrated antecedents of accountants’ motivated reasoning (e.g., client pressure), we look more...

The immediate expensing of R&D expenditures conceals managers' knowledge about the R&D projects. I examine whether higher R&D-intensive firms voluntarily guide more to decrease this information asymmetry. R&D state tax credits serve as instrumental variable for R&D investments. While total...

This study explores whether shocks to climate-related uncertainty induce increased managerial short-termism. Theory suggests that when individuals face long-run uncertainty, they often resort to short-termism to realize more immediate and certain benefits. Consistent with this, we expect that...

This paper studies the decision of firms to expense or capitalize R&D expenditures. The firm has an incentive to mismatch the benefits and costs of R&D, expensing a larger portion of R&D when the benefits occur in the long-run and capitalizing a larger portion when the benefits occur in the...

Investors demand higher premiums from firms whose future performance in R&D is difficult to evaluate. We construct a measure that captures investors' evaluation of a firm's R&D information quality (RDIQ) by linking a firm's historical innovation input (R&D expenditures) and innovation outcome...

In theory, financial markets promote innovation by selectively allocating capital to high-quality projects. In this paper, I show that secondary markets can inhibit innovation by permanently delaying option exercise and reducing a firm's ability to allocate capital efficiently. I find that...

We find that the stock market appears to mis-value the innovative activity of firms which are currently investing in R&D above its optimal value. A long-short portfolio strategy which exploits information on the firm's innovative ability and R&D level is profitable only for firms that overspend...

Because of the intangible and highly uncertain nature of innovation, investors may have difficulty processing information associated with a firm's innovation search strategy. Due to cognitive and strategic biases, investors are likely to pay more attention to unfamiliar explorative patents...