Is Language an Economic Institution? Evidence From R&D Investment

Document Type

Article

Publication Date

1-21-2020

Publication Title

Journal of Corporate Finance

Volume

62

First page number:

1

Last page number:

27

Abstract

Some languages encode future timing more ambiguously than others. We identify two economic channels through which more ambiguous reference to future timing leads to higher levels of R&D investment. Our empirical tests on country- and firm-level R&D investment confirm this prediction, even after controlling for an extensive set of formal and informal economic institutions and addressing endogeneity concern in multiple ways. Tests on patent generation provide further evidence that ambiguous reference to future timing leads to more innovation.

Keywords

Language; R&D; Innovation; Economic institution; Future-time reference

Disciplines

Business | Corporate Finance

Language

English

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