Local gambling preferences and corporate innovative success

Yangyang Chen, Edward J. Podolski, S. Ghon Rhee, Madhu Veeraraghavan

Research output: Journal article publicationJournal articleAcademic researchpeer-review

29 Citations (Scopus)

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. Foster School of Business, University of Washington.
Original languageEnglish
Pages (from-to)77-106
Number of pages30
JournalJournal of Financial and Quantitative Analysis
Volume49
Issue number1
DOIs
Publication statusPublished - 1 Jan 2014
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this