How does hedge fund activism reshape corporate innovation?
By Alon Brav, Wei Jiang, Song Ma, X. Tian. Journal of Financial Economics, 2016
491 citations recorded by the source corpus.
This paper studies how hedge fund activism reshapes corporate innovation. Firms targeted by hedge fund activists experience an improvement in innovation efficiency during the five-year period following the intervention. Despite a tightening in R&D expenditures, target firms experience increases in innovation output, measured by both patent counts and citations, with stronger effects seen among firms with more diversified innovation portfolios. We also find that the reallocation of innovative resources and the redeployment of human capital contribute to the refocusing of the scope of innovation. Finally, additional tests refute alternative explanations attributing the improvement to mean reversion, sample attrition, management’s voluntary reforms, or activists’ stock-picking abilities.
Subfields: Accounting, Finance, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/7ee277165e618a26414b05016861acc24205db67
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
In Finance
In Strategy and Management
Citations in the corpus
- How Valuable Is FinTech Innovation? (2019, unknown): “First, our work complements the sizable body of research that utilizes patent data to study innovation activity by firms (e.g., Griliches, Hall, and Pakes 1991; Hall, Jaffe, and Trajtenberg 2005; Kortum and Lerner 2000; Lerner 2009; Brav et al. 2018).”
- Top Management Human Capital, Inventor Mobility, and Corporate Innovation (2018, unknown): “Brav et al. (2018)), so that they venture into the development of newer technologies or pursue innovation in areas less familiar to the firm.”
- The Life Cycle of Corporate Venture Capital (2019, background): “As shown in GonzalezUribe (2013), Bernstein, Giroud, and Townsend (2014), and Brav et al. (2016), inventor-level 8Please refer to related sections and the Appendix for more details”