© 2024 — Journal of Financial Research

JFR Sponsored Awards


Southwestern Finance Association, Spring 2024

Best Paper in Corporate Finance:

Human Capital Reallocation and Agglomeration of Innovation
Jing Xue

This paper identifies the reallocation of human capital as a key channel of agglomeration spillovers for innovative firms. To measure agglomeration spillovers, I study how R&D labs in different local labor markets respond differently to scientific breakthroughs, which create large and unexpected shocks to innovation productivity in certain technology categories. Taking advantage of U.S. Census longitudinal establishment data matched with patent records, I systematically locate R&D labs in all local labor markets for each firm. I document four main findings. First, following scientific breakthroughs, affected labs in thicker local labor markets (i.e., commuting zones with more inventors innovating in a certain field) produce more patents and higher-quality patents, consistent with positive agglomeration spillovers. Second, the increase in patenting is mostly attributed to new hires rather than incumbent inventors. Third, the thick labor market effect is concentrated in states and industries where there is lower enforceability of non-compete agreements and labor is more mobile. Finally, using textual analysis to identify lab-level exposure to scientific breakthroughs, I find that inventors are reallocated to labs that are more favorably affected by shocks, which helps labs in thicker labor markets to more easily bring in inventors working in the same niche fields and having a diverse knowledge base. Taken together, these results point to labor mobility as a key force in explaining why innovative firms cluster, and suggest that the clustering of firms in thick labor markets can foster corporate innovation by facilitating productivity-enhancing reallocation of human capital following scientific breakthroughs.

Best doctoral submission in Corporate Finance:

* Insider Filing Delay and Corporate Misconduct
Brandon Cline, Caleb Houston, and Junnatun Naym

Delinquent insider trade reporting is a violation of securities law. Although these violations may appear insignificant, they indicate a firm’s broader culture of noncompliance, which can lead to other forms of misconduct. Using a panel dataset of 23,654 firm-year observations, we test the association between insider filing violations and future corporate misconduct and document a significant positive association. This effect is strongest for firms that do not have a CCO or internally imposed blackout trading restrictions. These findings suggest that implementing a strong internal regulatory system fosters a culture of compliance and establishes checks and balances within the firm.

Doctoral student, Junnatun Naym, accepts award for best doctoral submission from SWFA vice president, Andrew Lynch. 

Best doctoral submission in ESG: 

* CEO Cultural Heritage, CSR, and Firm Value
MD Showaib Rahman Sarker, Ahmed Elnahas

We examine the impact of CEOs’ cultural heritage on corporate social responsibility. CEOs originating from countries with high Power Distance, more Uncertainty Avoidance, and Long-term Orientation have high CSR scores, while those originating from Individualistic and Indulgent cultures have low CSR scores. This effect lasts up to three generations before it disappears due to acculturation. These results are robust to using difference-in-difference estimate, propensity score matching, entropy balancing, and Oster’s test to address endogeneity and selection bias. Our factor and machine learning (K-means clustering) analyses shed additional light on the countries of origin of high and low CSR performers.

Doctoral student, Md Showaib Rahman Sarker, accepts award for best doctoral submission from SWFA vice president, Andrew Lynch.


*denotes doctoral student


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