Does the market for corporate control impede or promote corporate innovation efficiency? Evidence from research quotient

Viput Ongsakul, Pattanaporn Chatjuthamard and Pornsit Jiraporn

Finance Research Letters, 2022, vol. 46, issue PA

Abstract: Exploiting two novel measures of innovation efficiency and takeover vulnerability, we explore the effect of the takeover market on corporate innovation. Our results reveal that a more active takeover market stifles innovation considerably, consistent with the notion that managers tend to be myopic when more exposed to hostile takeover threats, making investments that produce results in the short run at the expense of long-term projects that lead to more innovation. Additional robustness checks confirm the results, including fixed-effects and random-effects regressions, propensity score matching, GMM dynamic panel data analysis and instrumental-variable analysis. Our results are unlikely driven by endogeneity.

Keywords: Innovation; Corporate governance; Takeover threats; Research quotient; Market for corporate control (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321002798

DOI: 10.1016/j.frl.2021.102212

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