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Local gambling preferences and corporate innovative success

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journal contribution
posted on 01.02.2014, 00:00 authored by Y Chen, Edward PodolskiEdward Podolski, S G Rhee, M Veeraraghavan
This paper examines the role of local attitudes toward gambling on corporate innovative activity. Using a county's Catholics-to-Protestants ratio as a proxy for local gambling preferences, we find that firms located in gambling-prone areas tend to undertake riskier projects, spend more on innovation, and experience greater innovative output. We contrast the local gambling effect with chief executive officer (CEO) overconfidence, another behavioral effect reported to influence innovation. We find that local gambling preferences are a stronger determinant of innovative activity, with CEO overconfidence being more relevant to innovation in areas where gambling attitudes are strong.

History

Journal

Journal of financial and quantitative analysis

Volume

49

Issue

1

Pagination

77 - 106

Publisher

Cambridge University Press

Location

Cambridge, Eng.

ISSN

0022-1090

eISSN

1756-6916

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2014, Michael G. Foster School of Business, University of Washington