Journal of Corporate Finance Vol. 76 2022
Right-to-Work laws and corporate innovation
Abstract
We show that state right-to-work (RTW) laws significantly encourage corporate innovations in terms of patent grant and citation count. Consistent with the conjecture that the RTW-treated firms conduct more innovations due to their decreased financial distress risk, we find that the RTW adoption also significantly decreases treated firms' financial distress risk ex post, and its treatment effect on innovation outputs is stronger for treated firms that are ex ante more likely to experience financial distress. Further analysis indicates that treated firms intensify research and development expenditures and, likely due to their improved innovations, enhance their competitiveness in product markets.
- DOI
- 10.1016/j.jcorpfin.2022.102263
- Volume
- 76
- Pages
- 102263
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref