Document Type
Thesis
First Faculty Advisor
Cathy Zheng
Second Faculty Advisor
Huan Kuang
Keywords
federal regulations; corporate innovation; financial distress; political connection
Publisher
Bryant University
Rights Management
CC - BY - NC - ND
Abstract
We investigate the impact of regulatory intensity on innovation outcomes. We examine U.S. publicly listed firms, utilizing a novel firm-level measure of exposure to all federal regulations. The study reveals that highly regulated companies tend to exhibit lower patent value, a reduction in patent filings, and a decrease in patent citations. The results suggest additional costs imposed on firms burdened by heavy regulations. Furthermore, financial distress and political connections mitigate this negative effect. Overall, the paper uncovers a previously undiscovered connection between regulation at an aggregate level and innovation, emphasizing circumstances where regulations may impose costs that outweigh potential benefits.
Comments
Thesis idea partially inspired by recent data on U.S. federal regulations being available as well as change in president's political party affecting regulatory intensity for a given year.