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

Fingerprint

Crash
Stock prices
Innovation
Opacity
Information asymmetry
Equity markets
Quality signal
Disclosure
Innovation activities
Patent citations
Corporate governance
Information costs

Cite this

@article{7c7382e243464c258dac433785fbf3cb,
title = "Do patented innovations reduce stock price crash risk?",
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.",
author = "Hamdi Ben-Nasr and Lobna Bouslimi and Rui Zhong",
year = "2019",
month = "4",
day = "15",
doi = "10.1111/irfi.12265",
language = "English",
journal = "International Review of Finance",
issn = "1369-412X",
publisher = "John Wiley & Sons",

}

Do patented innovations reduce stock price crash risk? / Ben-Nasr, Hamdi; Bouslimi, Lobna; Zhong, Rui.

In: International Review of Finance, 15.04.2019.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Do patented innovations reduce stock price crash risk?

AU - Ben-Nasr, Hamdi

AU - Bouslimi, Lobna

AU - Zhong, Rui

PY - 2019/4/15

Y1 - 2019/4/15

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=85064504535&partnerID=8YFLogxK

U2 - 10.1111/irfi.12265

DO - 10.1111/irfi.12265

M3 - Article

JO - International Review of Finance

JF - International Review of Finance

SN - 1369-412X

ER -