Senior Fellows/Fellows

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Senior Fellows/Fellows

Do Innovation Subsidies Make Chinese Firms More Innovative? Evidence from the China Employer Employee Survey

Takeo HOSHI, Hong CHENG, Dezhuang HU
The Chinese government has been using various subsidies to encourage innovations by Chinese firms.  This paper examines the allocation and impacts of innovation subsidies, using the data from the China Employer Employee Survey (CEES). We find that the innovation subsidies are preferentially allocat...
Keywords: Innovation subsidies, state owned enterprises, political connection, patents, China Employer Employee Survey
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Dynamism Diminished: The Role of Housing Markets and Credit Conditions

Steven J. DAVIS, John HALTIWANGER
The Great Recession and its aftermath saw the worst relative performance of young firms in at least 35 years. More broadly, as we show, young-firm activity shares move strongly with local economic conditions and local house price growth. In this light, we assess the effects of housing prices and cre...
Keywords: Young firms, business dynamism, housing market boom and bust, credit supply shifts, Great Recession, employment fluctuations
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Social Transmission Bias and Investor Behavior

David HIRSHLEIFER, Bing HAN, Johan WALDEN
We offer a new social approach to investment decision making and asset prices. Investors discuss their strategies and convert others to their strategies with a probabil-ity that increases in investment returns. The conversion rate is shown to be convex in realized returns. Unconditionally, active s...
Keywords: capital markets, behavioral finance, active investing, social networks, thought contagion, transmission bias
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Visibility Bias in the Transmission of Consumption Beliefs and Undersaving

David HIRSHLEIFER, Bing HAN, Johan WALDEN
We study how bias in the social transmission process affects contagion of consumption beliefs and behavior. In the model, consumption is more salient than non-consumption. This visibility bias causes people to perceive that others are consuming heavily and have favorable information about future wea...
Keywords: Consumption behavior, Overconsumption, Visibility bias
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Stock Market Overvaluation, Moon Shots, and Corporate Innovation

David HIRSHLEIFER, Siew Hong TEOH, Ming DONG
We test how market overvaluation affects corporate innovation. Estimated stock overvaluation is very strongly associated with measures of innovative inventiveness (novelty, originality, and scope), as well as R&D and innovative output (patent and citation counts), and these relationships are hig...
Keywords: stock market misvaluation, innovation, R&D, patents, behavioral finance, market efficiency
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