Shareholder Litigation and Corporate Innovation

• 成果类型: Article
• 署名作者: Lin, Chen; Liu, Sibo; Manso, Gustavo
• 署名单位: University of Hong Kong; Hong Kong Baptist University; University of California System; University of California Berkeley
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3626
• 发表日期: 2021
• 页码: 3346-3367
• 关键词: shareholder litigation; INNOVATION; patents; derivative lawsuit

摘要

We investigate whether and to what extent shareholder litigation shapes corporate innovation by examining the staggered adoption of universal demand laws in 23 states from 1989 to 2005. These laws impose obstacles against shareholders filing derivative lawsuits, thereby significantly reducing managers' litigation risk. Using a difference-in-differences design and a matched sample, we find that, following the passage of the laws, firms invested more in research and development, produced more patents in new technological classes and more patents based on new knowledge, generated more patents with significant impacts, and achieved higher patent value. Our findings suggest that the external pressure imposed by shareholder litigation discourages managers from engaging in explorative innovation activities.