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Elvira Sojili

"Measuring innovation" by Dr Elvira Sojili (University of New South Wales)

The Financial Service Research Centre is pleased to host Dr. Elvira Sojili, Senior Lecturer of Finance in the School of Banking and Finance at UNSW, Australia.

Topic:    Measuring Innovation Around the World

Venue:  Lazaridis School of Business & Economics,  Dean's Boardroom (The Pollock Family Room)

Date:     Thursday, September 14, 2017, 2:00 PM – 3:30 PM

Abstract:

Research on corporate innovation often focuses on firms with positive US patent activity and reported R&D, thereby excluding over 90% of the firms in Compustat. By exploiting data from 30 global patent offices, we investigate the nature of missing innovation data in the US and around the world. Our central research question is how studies of innovation, or those that rely on measures of innovation as a control variable, should assess firms without reported R&D or patent activity. Our preliminary analyses indicate systematic and predictable patterns across firms and countries for missing patents and R&D. We then compare the empirical efficacy of excluding firms without US patents or without reported R&D to simple replacement methods, and to various econometric solutions for missing innovation data. We show how excluding or deleting firms without US patents or reported R&D, even in studies of just US firms, provides biased coefficient estimates and standard errors. We also demonstrate how the biases from simply excluding the missing observations lead to specific distortions in tests related to corporate growth and country level innovation capacity. We then discuss best practices and provide specific guidelines in handling missing R&D and patent data.

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