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Share repurchases and firm innovation
Author(s) -
Nguyen Lily,
Vu Le,
Yin Xiangkang
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12641
Subject(s) - robustness (evolution) , instrumental variable , business , identification (biology) , econometrics , monetary economics , microeconomics , economics , biochemistry , chemistry , botany , biology , gene
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.