Time-varying depreciation rates are estimated for research and development of the United States aggregate economy and innovation-intensive industries. Mean annual R&D depreciation rates are 31.5% for software, 41% for pharmaceuticals, 42% for semiconductors, and 30.4% for aggregate economy during 1978–2014. R&D depreciation rates vary across industries. R&D investment demand has separate elasticities in time-varying depreciation, interest rate and price growth, allowing for different rates of technology shifts across industries. Software R&D investment has the same magnitude of elasticities to depreciation, interest rate and price, supporting a user cost to apply. For pharmaceuticals and semiconductors, depreciation leads to more R&D investment that implies the effect of scale. For aggregate economy, depreciation reduces R&D investment more than interest rate, indicating obsolescence. Forecasting of R&D investment is improved at both industry and aggregate level. Forecastable time-varying depreciation, interest rate and price growth predict R&D investment based on the estimated demand function. The in-sample forecast comparison for 2015–2019 confirms the superiority to the alternative methods. Out-of-sample forecasts of R&D investment are carried out through 2025, and R&D capital stocks are constructed across industries and aggregate U.S. economy.

Abstract We investigate the impact of the fiduciary duty of loyalty on corporate culture. Leveraging the staggered state adoption of corporate opportunity waiver (COW) laws as an exogenous fiduciary loyalty decline, we find that COW laws deteriorate corporate culture. This effect operates through increased board overlapping and director busyness and is more pronounced in firms with legal-expert directors, weaker governance, and greater outside opportunities as well as in smaller or younger firms. The results are robust across alternative measures, time frames, legislative events, estimation strategies, etc. Overall, the fiduciary duty of loyalty plays a crucial role in enhancing corporate culture and firm performance. (JEL G34, G38, M14)

Abstract We construct a measure ( fLMA ) of the extent to which neighboring firms hire similar types of workers, based on the similarity between the labor profile of a firm and that of its locality. We show that a firm’s innovation is positively related to fLMA. The enhanced labor mobility induced by higher fLMA is an important channel for this positive relation. This relation is stronger when firms have increased outside job opportunities for employees, increased knowledge spillovers via coworkership, and more employee stock options. Innovation is higher when intellectual property ownership is with employers, not employees. This effect increases in fLMA.

Narcissism is a multifaceted personality trait that profoundly influences individuals' cognition, emotions, and actions. This study investigates the relationship between narcissistic CEOs and their engagement in opportunistic insider trading. Utilizing a quantitative measure of CEOs' narcissism derived from textual analysis, we find that CEOs with a higher level of narcissism engage in opportunistic insider trading more intensely. To mitigate endogeneity concerns, we employ various rigorous approaches, including matching, instrumental variable, Heckman's two-step sample selection model, and falsification tests. Through cross-sectional analysis, we find that the impact of CEOs' narcissism on opportunistic insider trading is more pronounced among CEOs with limited legal knowledge, facing weaker external and internal monitoring pressure, working at larger firms, and being male. In addition, we demonstrate that the insider trades of narcissistic CEOs are less profitable and less informative than those of non-narcissistic CEOs, as evidenced by subsequent stock performance.