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How Share Repurchase Affects Firm Innovation

28th Australasian Finance and Banking Conference

30 Pages Posted: 20 Aug 2015

See all articles by Lily Nguyen

Lily Nguyen

The University of Queensland - UQ Business School

Le Vu

La Trobe University - Department of Economics & Finance

Xiangkang Yin

Deakin University; Financial Research Network (FIRN)

Date Written: August 1, 2015

Abstract

In this paper, we investigate the relationship between share repurchase and firm innovation. Using a sample of 6,889 U.S. firms for the 1996-2006 period, we find a significantly negative effect of share repurchase on current and future firm innovation. Our identification strategy based on the instrumental variables approach suggests this negative effect is causal. The relationship between share repurchase and firm innovation remain valid in all robustness tests.

Keywords: Share repurchase, Firm innovation, Patents

JEL Classification: G35, O31

Suggested Citation

Nguyen, Lily and Vu, Le and Yin, Xiangkang, How Share Repurchase Affects Firm Innovation (August 1, 2015). 28th Australasian Finance and Banking Conference. Available at SSRN: https://ssrn.com/abstract=2647816 or http://dx.doi.org/10.2139/ssrn.2647816

Lily Nguyen

The University of Queensland - UQ Business School ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Le Vu

La Trobe University - Department of Economics & Finance ( email )

Donald Whitehead Building: Level 3, DWB313
Department of Economics & Finance
Bundoora, Victoria 3086
Australia

Xiangkang Yin (Contact Author)

Deakin University ( email )

Melbourne, Victoria
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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