"Competition and the Value of Innovation", Under Review [SSRN Link]
Abstract: I investigate how competition affects the economic value of innovation, the primary incentive for corporate R&D investments. I measure the economic value of innovation based on the changes in patenting firms' stock market value around patent issuance dates, following Kogan et al. (2017). The economic value of innovation is higher in industries with a low level of competition. Within an industry, firms at the technological frontier or those that have relatively high pricing power enjoy higher economic returns from patents. I use a quasi-natural experimental design to compare the value of patents issued immediately before and after competition-altering events. Using horizontal M&A announcements as anti-competitive events, I show that an expected decrease in market competition leads to an increase in patent value.
"Cyanide on the Rand: Competing Methods of Knowledge Transfer", with Lyndon Moore [SSRN Link]
Abstract: We investigate how competing mechanisms of technology spillovers improved productivity in a single-product, fixed-price setting: the introduction of the cyanide method of gold extraction in South Africa in the 1890s. Using hand-collect mine-level monthly productivity data from archival sources, we find knowledge spillovers at both the extensive and intensive margins. Mines managed by the same “mining house” (large shareholders of individual mining companies) were more likely to adopt the cyanide process. After the initial adoption of cyanide, we document continuous productivity improvements as the most effective use of this new technology was refined. Technological know-how was transmitted among mines in the same mining house via the use of common managers and engineers. Mines learned from their geographical neighbours, but the spillovers were very localized.
"Technological Knowledge and Corporate Governance", with Hae Won (Henny) Jung and Dalida Kadyrzhanova, Revise and Resubmit at The Review of Corporate Finance Studies [SSRN Link]
Abstract: We examine the effect of technological knowledge on agency problems. We provide a simple analytical framework to show that a loss in firm value due to weak governance should be larger when there is more knowledge about a firm's technology. We provide comprehensive and robust empirical evidence for the main prediction. The complementary interaction of governance with technological knowledge is, in particular, stronger for firms that are monitored by directors with technical expertise. Using several identification strategies, we also show that our results are robust to potential endogeneity concerns.
Work in Progress:
"Technology adoption and Asset Prices", with Neal Galpin and Lyndon Moore