Journal of Financial and Quantitative Analysis Vol. 49 No. 1 2014

Local Gambling Preferences and Corporate Innovative Success

Yangyang Chen^1,2,3,4,5,6; Edward Podolski^1,2,3,4,5,6; S. Ghon Rhee^1,2,3,4,5,6; Madhu Veeraraghavan^1,2,3,4,5,6

¹ University of Hawaii System · ² Korea Advanced Institute of Science and Technology · ³ La Trobe University · ⁴ T A Pai Management Institute · ⁵ Monash University · ⁶ National Cheng Kung University

Abstract

This paper examines the role of local attitudes toward gambling on corporate innovative activity. Using a county’s Catholics-to-Protestants ratio as a proxy for local gambling preferences, we find that firms located in gambling-prone areas tend to undertake riskier projects, spend more on innovation, and experience greater innovative output. We contrast the local gambling effect with chief executive officer (CEO) overconfidence, another behavioral effect reported to influence innovation. We find that local gambling preferences are a stronger determinant of innovative activity, with CEO overconfidence being more relevant to innovation in areas where gambling attitudes are strong.

DOI

10.1017/s0022109014000246

Volume

49

Issue

1

Pages

77-106

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓