The Effect of Capital Gains Tax Policy Changes on Long-Term Investments

He, Eric; Jacob, Martin; Vashishtha, Rahul; Venkatachalam, Mohan

doi:10.2139/ssrn.3383649

Cited by 2 publications

(3 citation statements)

References 82 publications

(88 reference statements)

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“…29 For each measure, we create percentile ranks for the universe of firms that issued at least one patent in that year. In Table 10, we replicate the results in Table 3 after excluding either the top tercile or the bottom tercile of observations from the analysis (He et al (2019)). In columns 1 and 2, we exclude the top and bottom terciles of citations per patent observations to ensure that results are consistent without highly cited or low citation patents respectively.…”

Section: Robustness Testsmentioning

confidence: 77%

“…In addition, the dual class structure should reduce short-term market pressure and allow firms to focus on long-term value creation and riskier, more explorative innovation (March (1991)). We distinguish between highly creative patent production and patents of low creativity by separately examining EXPLORATIVE patents (Fitzgerald et al (2019)), where at least 80% of the prior patents cited are new to the firm representing the patent exploring new areas, and EXPLOITATIVE patents (He et al (2019)) that include at least one self-citation and draw on a firm's prior patent areas. We present these results in Panel B.…”

Section: Innovation Activities and Disproportionate Controlmentioning

confidence: 99%

“…Defined as in He et al (2019). Equals the total number of firm 's patents granted in year that are classed as "exploitative" divided by assets of firm I in year t. Patent is flagged as "exploitative" if it contains at least one self-citation (citing at least one patent from the same firm i.…”

Section: Appendix A: Variable Descriptionsmentioning

confidence: 99%

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Dual Class Share Structure and Innovation

2018

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We find a positive association between disproportionate insider control and patent output, quality, creativity, and the efficient use of R&D in innovation. Managers of firms characterized by disproportionate control also take more personal innovative risk by filing their own patents. By controlling for standard entrenchment measures, we also find that insider entrenchment due to superior voting rights is distinct from entrenchment derived from standard antitakeover measures. Disproportionate insider control fosters innovation more than other forms of entrenchment. Positive effects are confined, however, to financially constrained firms and dissipate within ten years following the IPO. Dual class firms with financial constraints prefer to issue debt and are more likely to issue debt after collateralizing their patent portfolio. Our results, which control for self-selection bias by using a sample of dual and single class firms matched on their innovativeness pre-IPO, therefore support the recent call for sunset provisions on dual class shares.

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Section: Robustness Testsmentioning

confidence: 77%

Section: Innovation Activities and Disproportionate Controlmentioning

confidence: 99%