Disregarding the Shoulders of Giants: Inferences from Innovation Research

David M. Reeb, and Wanli Zhao, 2021. Disregarding the Shoulders of Giants: Inferences from Innovation Research, forthcoming, Review of Corporate Finance Studies.

56 Pages Posted: 21 May 2018 Last revised: 11 Oct 2021

See all articles by David M. Reeb

David M. Reeb

National University of Singapore

Wanli Zhao

Bocconi University - Department of Accounting

Date Written: October 5, 2021

Abstract

Studies proposing new determinants of corporate innovation include previously identified factors in an ad hoc manner. We find that only a sparse set of recently proposed innovation determinants provide material, independent information about patents and citations. We document that inferences in recent empirical studies often change when we include previously discovered innovation determinants. Commonly used econometric methods, including fixed effects and plausible shocks, do not always mitigate the need to condition on previously identified innovation determinants. Rather than randomly selecting a subset of control variables from prior studies, our analysis offers researchers a framework to consider previously proposed variables.

Keywords: variable selection, machine learning, lasso, innovation, patents, citations

JEL Classification: O30, G30, G32, O34

Suggested Citation

Reeb, David M. and Zhao, Wanli, Disregarding the Shoulders of Giants: Inferences from Innovation Research (October 5, 2021). David M. Reeb, and Wanli Zhao, 2021. Disregarding the Shoulders of Giants: Inferences from Innovation Research, forthcoming, Review of Corporate Finance Studies., Available at SSRN: https://ssrn.com/abstract=3175055 or http://dx.doi.org/10.2139/ssrn.3175055

David M. Reeb

National University of Singapore ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://www.davidreeb.net

Wanli Zhao (Contact Author)

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

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