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Hedge Funds and Corporate Innovation

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  • Ying Wang
  • Jing Zhao

Abstract

type="main"> Using National Bureau of Economics Research patent data and hedge fund holdings in US firms from 1998 to 2006, we examine the effect of hedge fund ownership on corporate innovation. We find that hedge fund ownership increases both patent quantity and quality, even after controlling for endogeneity. Hedge funds appear to increase innovation and firm value by increasing research and development (R&D) productivity and innovation efficiency rather than R&D input. Our study suggests another channel through which hedge funds may enhance firm value, contributing to the literature on hedge fund ownership.

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  • Ying Wang & Jing Zhao, 2015. "Hedge Funds and Corporate Innovation," Financial Management, Financial Management Association International, vol. 44(2), pages 353-385, June.
    • Handle: RePEc:bla:finmgt:v:44:y:2015:i:2:p:353-385
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    File URL: http://hdl.handle.net/10.1111/fima.12059
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    6. Chang, Hsiu-yun & Liang, Woan-lih & Wang, Yanzhi, 2019. "Do institutional investors still encourage patent-based innovation after the tech bubble period?," Journal of Empirical Finance, Elsevier, vol. 51(C), pages 149-164.
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