Obaid ur Rehman, Xiaoxing Liu, Kai Wu, Shaofang Li
{"title":"Firm-Level Political Risk and Corporate Innovation","authors":"Obaid ur Rehman, Xiaoxing Liu, Kai Wu, Shaofang Li","doi":"10.2139/ssrn.3880272","DOIUrl":null,"url":null,"abstract":"This study finds a negative association between firm-level political risk (PRISK) and firm-level patents and citations in general. The PRISK extracted from different sectors also shows similar effects. This impact is more pronounced when a firm belongs to economically uncertain states, politically corrupted regions, and competitive industries. Besides, we identify that increasing cost of capital is a transmission channel that surges the negative impact of PRISK on corporate innovations. We also find the robust negative impact of PRISK on innovation when firms mainly rely on external finances. Our findings have policy implications for the firm’s manager, market participants, and practitioners.","PeriodicalId":13701,"journal":{"name":"International Corporate Finance eJournal","volume":"9 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2021-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Corporate Finance eJournal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3880272","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 1
Abstract
This study finds a negative association between firm-level political risk (PRISK) and firm-level patents and citations in general. The PRISK extracted from different sectors also shows similar effects. This impact is more pronounced when a firm belongs to economically uncertain states, politically corrupted regions, and competitive industries. Besides, we identify that increasing cost of capital is a transmission channel that surges the negative impact of PRISK on corporate innovations. We also find the robust negative impact of PRISK on innovation when firms mainly rely on external finances. Our findings have policy implications for the firm’s manager, market participants, and practitioners.
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