Research Interests

Technology Strategy, Innovation Management, Economics of Innovation, Intellectual Property, Human Capital, Financial Markets, Corporate Finance 

Peer-Reviewed Publications

The bright side of financial derivatives: Options trading and firm innovation
(with Ivan Blanco)
Journal of Financial Economics, 2017, 125(1), 99-119.
Received the BME Award to the Best Paper on Derivatives in 2015
Featured in CFA Digest, National Affairs, Financial Express, IESE Insight, ValueWalk, Medium
Download Paper
Download Internet Appendix
Abstract: Do financial derivatives enhance or impede innovation? We answer this question by examining the relationship between equity options markets and standard measures of firm innovation. We find that firms with more options trading activity generate more patents and patent citations per dollar invested in research and development (R&D), after accounting for other confounding factors. These results are confirmed when we use a propensity score matching procedure and an instrumental variable approach to control for the potential endogeneity of options trading. The evidence is consistent with the notion that the enhanced informational efficiency induced by options leads to an improved allocation of corporate resources. We further discuss possible underlying economic mechanisms through which more active options markets boost innovation and show that the effect remains substantial even after controlling for these mechanisms. Considering the average increase in the dollar volume of options traded for our sample firms, we conclude that a 200% move in options volume increases firm innovation by about 31%.

The effect of patent protection on inventor mobility
(with Eduardo Melero and Neus Palomeras)
Management Science, 2020, 66(12), 5485-5504.
Published as Lead Article in the December 2020 issue of Management Science
Featured in  the  Management Science Review blog, Written Description, IESE Insight
Referenced in the Australian IP Report 2023
Download Paper
Download Internet Appendix
Abstract: This article investigates the effect of patent protection on the mobility of early-career employee-inventors. Using data on patent applications filed at the U.S. Patent and Trademark Office between 2001 and 2012 and examiner leniency as a source of exogenous variation in patent protection, we find that one additional patent granted decreases the likelihood of changing employers, on average, by 23%. This decrease is stronger when the employee has fewer coinventors, works outside the core of the firm, and produces more basic-research innovations. These findings are consistent with the idea that patents turn innovation-related skills into patent-holder-specific human capital.

How mixed ownership affects decision making in turbulent times: Evidence from the digital revolution in telecommunications
(with Hakki Dogan Dalay, Andrea Fosfuri and Christian Helmers)
Journal of Corporate Finance, 2020, 64, 101626.
Featured in Handelsblatt, Via Sarfatti 25 - The Bocconi online news magazine
Download Paper
Download Internet Appendix
Abstract: This study examines how the ownership structure of corporations shapes their responses to discontinuous technological change. We analyze whether mixed ownership, a situation where following privatization a company's shares are held both privately and by the government, is associated with less innovation in response to discontinuous technological change. We argue that mixed ownership is associated with governance conflicts that affect a company's ability to respond to the challenges posed by discontinuous technological change. Our empirical analysis uses data on European telecommunications operators for the period 2000-2016 when they faced sweeping technological change due to the advent of Internet-based communication services. Our baseline result suggests that operators with mixed ownership file around 70% fewer patents in relevant digital technologies than companies that are fully private or where the government owns a majority of shares. We find that mixed ownership also affects negatively the acquisition of externally developed technology.

The strategic allocation of inventors to R&D collaborations
(with Neus Palomeras)
Strategic Management Journal, 2021, 42(1), 144-169.
Download Paper
Download Internet Appendix
Abstract: In this paper, we suggest that staffing decisions in R&D alliances can reduce the inherent tension between value creation and value protection faced by participating firms. By considering R&D workers a primary source of knowledge leakage, we analyze the role of their intellectual property (IP) protection in shaping the misappropriation threat posed by the partner. We rely on patent ownership and inventorship data to analyze the selection of individuals for R&D collaborations in the pharmaceutical industry between 1991 and 2010. Our results suggest that an inventor's strength of IP protection is an important determinant in allocation decisions since it contributes to offsetting leakage risks in the alliance. The effect is especially strong in alliances that anticipate higher hazards.

Asymmetric information and R&D disclosure: Evidence from scientific publications
(with Stefano H. Baruffaldi and Markus Simeth)
Management  Science,  2024, 70(2), 1052-1069.
Included in the Top 20 'Most Read Articles' in Management Science in 2023
Featured in The FinReg Blog sponsored by the Duke Financial Economics Center, National Affairs, IESE Insight
Download Paper
Download Internet Appendix
Abstract: We examine how asymmetric information in financial markets affects voluntary research and development (R&D) disclosure, considering scientific publications as a disclosure channel. Difference-in-differences regressions around brokerage house mergers and closures, which increase information asymmetry through reductions in analyst coverage, indicate a quick and sustained increase in scientific publications from treated firms relative to the number of publications from control firms. The treatment effects are concentrated among firms with higher information asymmetry and lower investor demand, firms with greater financial constraints, and firms with lower proprietary costs. We do not find evidence of changes in financial disclosure, nor do we find changes in patenting. Results from ordinary least squares regressions show that scientific publications by firms are positively associated with investor attention toward those firms. We complement these results with qualitative evidence from conference calls. Our results highlight the limitations and tradeoffs R&D firms face in their financial market disclosure policies.

Holdup, knowledge transferability, and productivity: Theory and evidence from knowledge workers
(with Emre Ekinci)
The Journal of Industrial Economics,  2024, 72(1), 193-252.
A previous version was circulated under the title  "The effect of firing costs on worker productivity and turnover: Theory and evidence"
Download Paper
Abstract: This paper explores, both theoretically and empirically, how firing costs due to protection against wrongful discharge affect the productivity of knowledge workers. We develop a model in which workers are essential to knowledge transfer between firms and worker effort is firm-specific in the sense that a worker can be fired before reaping the full return from effort (i.e., before acquiring all of the potential knowledge valuable to competing firms). Our model shows that the hold-up risk faced by the workers induces them to curtail their innovative effort. However, if the worker’s existing knowledge stock is sufficiently transferable to competing firms, then an increase in firing costs inhibits the firm’s ability to hold up the worker and thereby leads to higher effort. This mechanism yields testable predictions that concern how firing costs affect worker productivity. In our empirical analysis, we consider the passage of the wrongful discharge laws in the US as an exogenous increase in firing costs. Using individual-level data constructed from patents issued to inventors by the United States Patent and Trademark Office (USPTO), we find supporting evidence for the model’s implications.

On "Innovation and institutional ownership"
(with Markus Simeth)
Journal of Corporate Finance, 2024, 86, 102569.
(Part of the special issue on Statistically Non-significant Results in Financial Economics)
Published as Lead Article in the June 2024 issue of the Journal of Corporate Finance
Download Paper
Abstract: In their article "Innovation and Institutional Ownership," Aghion, van Reenen, and Zingales (2013) find that the rise in institutional stock ownership in the U.S. during the 1990s led to an increase in corporate innovation, as measured by patent and patent citation counts. Their article concludes that "contrary to the view that institutional ownership induces a short-term focus in managers, we find that their presence boosts innovation" (p. 302). Subsequent research has generally accepted this finding at face value. However, we uncover several critical issues with their data. Addressing these issues renders the results economically and statistically insignificant and, in some instances, even suggests a negative relationship between institutional ownership and U.S. innovation.

Working Papers

Institutional ownership and corporate scientific research
(with Sampsa Samila and Markus Simeth)
Download Paper

R&D disclosure and institutional investors: Evidence from mandated patent disclosure
(with Ivan Blanco and Sergio Garcia)
Previous versions were circulated under the title "Looking for transparency: Institutional ownership and innovation disclosure" and "Mandated disclosure, institutional investors and stock price informativeness: Evidence from a quasi-natural experiment"
Download Paper

Meet me halfway: Financial analysts and strategic change
(with Ivan Blanco,  Fabrizio Ferraro and Giovanni Valentini)
Download Paper

Inventors' job security and types of innovations
(with Eduardo Melero and Neus Palomeras)
New version coming soon

Escaping import competition through innovation
(with Dandan Xia and Bruno Cassiman)
New version coming soon