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

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  • Ongsakul, Viput
  • Chatjuthamard, Pattanaporn
  • Jiraporn, Pornsit

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.

Suggested Citation

  • Ongsakul, Viput & Chatjuthamard, Pattanaporn & Jiraporn, Pornsit, 2022. "Does the market for corporate control impede or promote corporate innovation efficiency? Evidence from research quotient," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321002798
    DOI: 10.1016/j.frl.2021.102212
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    Cited by:

    1. Chatjuthamard, Pattanaporn & Jiraporn, Pornsit & Lee, Sang Mook & Sarajoti, Pattarake, 2024. "Customer concentration, managerial risk aversion, and hostile takeover threats," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 268-279.
    2. Gigante, Gimede & Angioni, Ottavio, 2023. "The impact of preventive takeover defences on corporate financial performance: Evidence from the US," Finance Research Letters, Elsevier, vol. 55(PA).
    3. Shen, Yuanyuan, 2024. "The impact of investor interest protection on corporate innovation efficiency," Finance Research Letters, Elsevier, vol. 62(PA).
    4. Hui Zhang & Haiqian Ke, 2022. "Understanding the Heterogeneous Impact of Innovation Efficiency on Urban Ecological Footprint in China," IJERPH, MDPI, vol. 19(10), pages 1-16, May.

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    More about this item

    Keywords

    Innovation; Corporate governance; Takeover threats; Research quotient; Market for corporate control;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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