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Share repurchases and firm innovation
journal contributionposted on 2021-04-01, 00:00 authored by Lily Nguyen, Le Vu, Xiangkang YinXiangkang Yin
We examine whether corporate decisions such as share repurchases influence a firm’s intangible assets and their production. We find a significantly negative relationship between share repurchases and firm innovation. The negative relationship survives all considered robustness tests. We further apply two identification strategies, namely, difference‐in‐differences analysis and instrumental variables estimation, to establish that the negative effect is causal; that is, from share repurchases to innovation.