Research

Local Innovation Spillovers of IPOs

I study the spillover effects of initial public offerings (IPOs) on local innovation. As the decision to go public is endogenous to local economic conditions, I compare counties in which there is a completed IPO with those in which an IPO attempt is withdrawn from registration. To address the additional bias introduced by this strategy,  I use NASDAQ returns during the book-building period as an instrument for IPO completion. I find that local innovation increases after a firm goes public in a county, compared to counties with a failed IPO. The innovation spillovers are stronger for firms operating in similar technologies as the IPO firms, in counties where IPO establishments constitute a larger portion of the local economy, and in smaller geographies around the IPO establishments. Local innovation in IPO counties increases mainly through existing firms becoming more innovative and attracting new inventors to the area.   

Going Public and the Boundaries of the Firm

I study the effects of initial public offerings (IPOs) on firm boundaries. Since the decision to go public is endogenous, I compare firms that successfully complete their IPO filings and go public with those that withdraw their filings and remain private. To address the additional bias introduced by this strategy, I use NASDAQ returns during the book-building period as an instrument for IPO completion. I find that there is a significant degree of restructuring within firms after an IPO. Firms that successfully complete their IPO filings are more likely to engage in divestitures after going public. Moreover, these firms are also more active in acquisitions and form significantly more strategic alliances with other firms. These results highlight that firms tend to shift certain business activities outside their boundaries after transitioning to public ownership.

Work In Progress

Corporate Innovation: Text-Based Evidence from Sweden

The existing literature almost exclusively relies on patents or R&D intensity to measure corporate innovation. I construct a novel text-based measure of innovation by analyzing annual reports of Swedish public companies between 1994 and 2018. I estimate a topics model on the corpus of annual reports using the Latent Dirichlet Allocation (LDA) algorithm. Out of the estimated topics, the one closest to a standard textbook on innovation is selected as the innovation topic. Then, the loading on the innovation topic in each document is used as a text-based measure of innovation. The text-based measure is expected to capture non-patentable innovations, such as improvements in organizational structure or management practices, as well as traditional patenting outcomes. I show that it is strongly associated with patent counts and (to a lesser extent) with R&D intensity. Moreover, it is highly informative in predicting the future operating performance of patent-producing firms as well as that of firms that do not engage in patenting activity. 

Do Acquisitions Stifle Local Innovation? 

Acquisition of a local firm by a distant acquirer raises considerable objections by the local communities due to concerns over layoffs and the draining of economic activity. However, these concerns are not necessarily warranted, given that acquiring firms might bring in key talent and managerial expertise and achieve a better utilization of local resources. In this paper, using patent-based metrics, I analyze the spillovers of acquisitions on local innovation. As the selection of takeover targets is endogenous to local economic conditions, I compare successful M&A bids with failed ones as a quasi-experiment. The empirical results indicate that the local innovation scale goes down after a firm is taken over in a county, compared to the case when an M&A bid fails. The innovation spillovers are stronger for firms that operate in similar technologies as the target firms, when the target establishments constitute a larger portion of the local economy, and in smaller geographies around the target establishments.

Pre-PhD Working Papers