This study explores the interaction between innovations and financial markets using data of China that present significant geographic variations in development. Provincial banking development encourages local innovations, and provincial intellectual property (IP) protection raises the market...

This paper empirically examines the effects of industrial and geographic innovations on firm-level profitability and stock returns due to spillovers. Using the data of U.S. patents and patent inventors, we propose empirical proxies for industrial and geographic spillovers and find a positive...

This paper studies the asset pricing implications of industrial pollution. A long-short portfolio constructed from firms with high versus low toxic emission intensity within industry generates an average return of 4.42% per annum, which remains significant after controlling for risk factors. We...

We examine how the strengthened legal protection of novel designs prevents mimicking behaviors and thus enhances the economic value of novel designs and their assignees. Using an unexpected decision of the Federal Circuit Court of Appeals, we show that more intricate designs (which were more...

We investigate the real effects of foreign exchange (FX) uncertainty on an important economic growth engine-technological innovation. In a sample consisting of 55 countries, we measure FX uncertainty using the unexpected FX volatility and then show that heightened FX uncertainty is associated...

This paper examines the influence of directors' job security on firms' innovation project choices.Using the staggered enactment of majority voting legislation as an exogenous threat to directors'job security, we find that after legislative changes, the affected firms produce fewer...

In this study, we propose a Stepwise SPA Test which is powerful in searching for predictive models or profitable investment targets with appropriate family-wise error control. Our testing method, built on White's Reality Check (2000), Hansen's SPA test (2005), and Romano and Wolf's stepwise...

We propose that innovative originality (InnOrig) is a valuable organizational resource, and that owing to limited investor attention and skepticism of complexity, firms with greater InnOrig are undervalued. We find that firms' InnOrig strongly predicts higher, more persistent, and less volatile...

Firms winning the R&D 100 Award, a prestigious award for technology breakthroughs in product inventions, provide significantly higher subsequent stock returns. We hypothesize that such return predictability stems from the awarded firms' access to high-end markets in segmented markets. We develop...

Firms can become less innovative following a sudden “inflow” of cash. Specifically, multinational firms that were eligible to repatriate (and indeed repatriated) cash to the U.S. under the American Jobs Creation Act generate less valuable patents than otherwise similar firms. They also...