Do patented innovations reduce stock price crash risk?

Hamdi Ben-Nasr, Lobna Bouslimi, Rui Zhong

Research output: Contribution to journalArticle

Abstract

Using a large sample of US firms, we document a significantly negative relation between the number of patents (citations) and stock price crash risk. Our findings are consistent with the arguments that patented innovation activities send a high-quality signal and reduces proprietary information costs, which lowers information asymmetry and enhance disclosure. Further, we find that such impact of patented innovation on stock price crash risk is more pronounced in firms with weak corporate governance and high information opacity. Our findings provide new evidence on the real effects of patented innovation on crash risk in equity market.

Original languageEnglish
Number of pages34
JournalInternational Review of Finance
DOIs
Publication statusE-pub ahead of print - 15 Apr 2019

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