Is Language an Economic Institution? Evidence from R&D Investment

56 Pages Posted: 13 Oct 2018 Last revised: 22 Jan 2021

See all articles by J. Daniel Chi

J. Daniel Chi

University of Nevada, Las Vegas (UNLV) - Department of Finance

Xunhua Su

Norwegian School of Economics (NHH)

Yun Tang

Organization for Economic Co-Operation and Development (OECD)

Bin Xu

University of Leeds

Date Written: December 16, 2019

Abstract

Some languages encode future timing more ambiguously than others. We identify two economic channels through which more ambiguous reference to future timing leads to higher levels of R&D investment. Our empirical tests on country- and firm-level R&D investment confirm this prediction, even after controlling for an extensive set of formal and informal economic institutions and addressing endogeneity concern in multiple ways. Tests on patent generation provide further evidence that ambiguous reference to future timing leads to more innovation.

Keywords: language, R&D, innovation, economic institution, future-time reference

JEL Classification: D02, G30, O30, O32, Z13

Suggested Citation

Chi, Jianxin Daniel and Su, Xunhua and Tang, Yun and Xu, Bin, Is Language an Economic Institution? Evidence from R&D Investment (December 16, 2019). Journal of Corporate Finance, June 2020, Available at SSRN: https://ssrn.com/abstract=3262822 or http://dx.doi.org/10.2139/ssrn.3262822

Jianxin Daniel Chi (Contact Author)

University of Nevada, Las Vegas (UNLV) - Department of Finance ( email )

4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States

HOME PAGE: http://www.unlv.edu/people/jianxin-chi

Xunhua Su

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

HOME PAGE: http://sites.google.com/site/xunhuasu/

Yun Tang

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Bin Xu

University of Leeds ( email )

Leeds
United Kingdom

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