R&D tax credits, technology spillovers, and firms' product convergence
- Authors
- Byun, SK[Byun, Seong K.]; Oh, JM[Oh, Jong-Min]; Xia, H[Xia, Han]
- Issue Date
- 1-Jun-2023
- Publisher
- ELSEVIER
- Keywords
- R& D tax credits; Product offering strategies; Technology spillovers
- Citation
- JOURNAL OF CORPORATE FINANCE, v.80
- Indexed
- SSCI
SCOPUS
- Journal Title
- JOURNAL OF CORPORATE FINANCE
- Volume
- 80
- URI
- https://scholarworks.bwise.kr/skku/handle/2021.sw.skku/102743
- DOI
- 10.1016/j.jcorpfin.2023.102407
- ISSN
- 0929-1199
- Abstract
- Using a difference-in-differences (DiD) setting that leverages the staggered adoption of R&D tax credits across the U.S. states, we show that after a firm receives the tax credits, products of its peers become significantly more similar to the recipient firm. Such product convergence is particularly strong when peer firms face greater pressure from market participants to uphold short-term performances. We further show that the effect of R&D tax credits likely works through the increased technology spillovers, which motivate peers to imitate instead of differentiating. Accordingly, we show that peer firms shift their patent composition from breakthrough to in-cremental innovations following the R&D tax subsidy.
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Collections - Business > Department of Business Administration > 1. Journal Articles
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