Share Repurchases and Firm Innovation
Accounting & Finance. Forthcoming
36 Pages Posted: 20 Aug 2015 Last revised: 7 Jul 2020
Date Written: August 1, 2015
We examine whether corporate decisions such as share repurchases influence a firm’s intangible assets and their production. We find a significantly negative relationship between share repurchases and firm innovation. The negative relationship survives all considered robustness tests. We further apply two identification strategies, namely, difference-in-differences analysis and instrumental variables estimation, to establish that the negative effect is causal; that is, from share repurchases to innovation.
Keywords: Share repurchase, Firm innovation, Patents
JEL Classification: G35, O31
Suggested Citation: Suggested Citation