TY - JOUR
T1 - Local gambling preferences and corporate innovative success
AU - Chen, Yangyang
AU - Podolski, Edward J.
AU - Rhee, S. Ghon
AU - Veeraraghavan, Madhu
N1 - Funding Information:
We thank Christine Brown, Rosita Chang, Xin Chang, Philip Gray, Jarrad Harford (the editor), Francis In, Boochun Jung, Jay Heon Jung, Jun-Koo Kang, Joon-Ho Kim, Alexander Ljungqvist, Kwang Woo Park, Choong-Yuel Yoo, and seminar participants at Monash University, Korea Advanced Institute of Science and Technology, and National Cheng Kung University for helpful comments and suggestions. We are especially grateful to an anonymous referee for the insightful comments and suggestions that have significantly improved the paper. We are also grateful to David Hirshleifer, Angie Low, and Siew Hong Teoh for providing the press-based measure of CEO overconfidence. We thank Kuankuan Wang for excellent research assistance. Rhee is grateful for a summer research grant from the Shidler College of Business. 29 04 2014 02 2014 49 1 77 106 Copyright © Michael G. Foster School of Business, University of Washington 2014 2014 Michael G. Foster School of Business, University of Washington
PY - 2014/2
Y1 - 2014/2
N2 - This paper examines the role of local attitudes toward gambling on corporate innovative activity. Using a county's Catholics-to-Protestants ratio as a proxy for local gambling preferences, we find that firms located in gambling-prone areas tend to undertake riskier projects, spend more on innovation, and experience greater innovative output. We contrast the local gambling effect with chief executive officer (CEO) overconfidence, another behavioral effect reported to influence innovation. We find that local gambling preferences are a stronger determinant of innovative activity, with CEO overconfidence being more relevant to innovation in areas where gambling attitudes are strong.
AB - This paper examines the role of local attitudes toward gambling on corporate innovative activity. Using a county's Catholics-to-Protestants ratio as a proxy for local gambling preferences, we find that firms located in gambling-prone areas tend to undertake riskier projects, spend more on innovation, and experience greater innovative output. We contrast the local gambling effect with chief executive officer (CEO) overconfidence, another behavioral effect reported to influence innovation. We find that local gambling preferences are a stronger determinant of innovative activity, with CEO overconfidence being more relevant to innovation in areas where gambling attitudes are strong.
UR - https://www.scopus.com/pages/publications/84904729896
UR - https://www.scopus.com/pages/publications/84904729896#tab=citedBy
U2 - 10.1017/S0022109014000246
DO - 10.1017/S0022109014000246
M3 - Article
AN - SCOPUS:84904729896
SN - 0022-1090
VL - 49
SP - 77
EP - 106
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 1
ER -