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Capital Account Liberalization and Firm Innovation: Worldwide Evidence.

Authors :
Hou, Fangfang
Xu, Xinpeng
Source :
Journal of Accounting, Auditing & Finance; Jan2024, Vol. 39 Issue 1, p278-303, 26p
Publication Year :
2024

Abstract

This study investigates whether capital account liberalization, a leading characteristic of globalization, is associated with firms' future innovation output. Employing a novel firm-level panel data set covering 41 countries over two decades, we show that capital account liberalization is significantly associated with higher corporate patenting activities, particularly for firms from innovation-intensive industries. Further analyses show that the effect is stronger among firms from economies in a better legal environment, signifying the important role of good institutional quality in facilitating the positive impact of liberalization. The effect is also stronger among firms with higher initial productivity, consistent with the "productivity" hypothesis, according to which bigger and more productive firms generate more innovation after liberalization. Our findings are robust to the use of various measurements, subsamples, and estimation models. This study provides global firm-level evidence of the real economic impact of financial globalization. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
0148558X
Volume :
39
Issue :
1
Database :
Complementary Index
Journal :
Journal of Accounting, Auditing & Finance
Publication Type :
Academic Journal
Accession number :
173824600
Full Text :
https://doi.org/10.1177/0148558X211059401