Share Repurchases and Firm Innovation

Nguyen, Lily; Vu, Le; Yin, Xiangkang

doi:10.2139/ssrn.2647816

Share Repurchases and Firm Innovation

Accounting & Finance. Forthcoming

36 Pages Posted: 20 Aug 2015 Last revised: 7 Jul 2020

See all articles by Lily Nguyen

Lily Nguyen

The University of Queensland - UQ Business School

Le Vu

Centre for Global Business, Monash Business School, Monash University

Xiangkang Yin

Deakin University; Financial Research Network (FIRN)

Date Written: August 1, 2015

Abstract

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

Nguyen, Lily and Vu, Le and Yin, Xiangkang, Share Repurchases and Firm Innovation (August 1, 2015). Accounting & Finance. Forthcoming, Available at SSRN: https://ssrn.com/abstract=2647816 or http://dx.doi.org/10.2139/ssrn.2647816