Disregarding the Shoulders of Giants: Inferences from Innovation Research

Innovation and institutional ownership

David M Reeb and Wanli Zhao

The Review of Corporate Finance Studies, 2022, vol. 11, issue 4, 923-964

Abstract: Studies proposing new determinants of corporate innovation include previously identified factors in an ad hoc manner. We find that only a sparse set of recently proposed innovation determinants provide material, independent information about patents and citations. We document that inferences in recent empirical studies often change when we include previously discovered innovation determinants. Commonly used econometric methods, including fixed effects and plausible shocks, do not always mitigate the need to condition on previously identified innovation determinants. Rather than randomly selecting a subset of control variables from prior studies, our analysis offers researchers a framework to consider previously proposed variables. (JEL G30, O30, G32, O34).Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Date: 2022
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