Share repurchases and firm innovation. (27th March 2020)

• Record Type: Journal Article
• Authors: Nguyen, Lily; Vu, Le; Yin, Xiangkang
• Is Part Of: Accounting and finance. Volume 61(2021)Supplement 1
• Page Start: 1665
• Page End: 1695
• Publication Date: 2020-03-27
• Subjects: Citations -- Innovation -- Patents -- Share repurchases; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1111/acfi.12641
• Languages: English
• ISSNs: 0810-5391

Abstract

Abstract: We examine whether corporate decisions such as share repurchases influence a firm's intangible assets and their production. We find a significantly negative relationship between share repurchases and firm innovation. The negative relationship survives all considered robustness tests. We further apply two identification strategies, namely, difference‐in‐differences analysis and instrumental variables estimation, to establish that the negative effect is causal; that is, from share repurchases to innovation.