Finance and Financial Management Commons^™

Corporate Innovation In A World Of Common Ownership, Cheng-Huei Chiao, Bin Qiu, Bin Wang

Finance Faculty Research and Publications

Purpose

The purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.

Design/methodology/approach

This paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.

Findings

The results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned …