Finance Seminar（2018-03)

Topic: Social Capital and Innovation: Evidence from Connected Holdings

Speaker: Hongxun Ruan, The Wharton School, University of Pennsylvania

Time: Wednesday, 31 January, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract:

This paper investigates how social capital affects innovation. I measure a firm’s social capital with connected holdings, which is the fraction of equity of a particular firm held by mutual funds whose managers are connected to the firm’s board members through educational networks. I use plausibly exogenous variation in the size of board members’ networks as an instrument for connected holdings. I find higher connected holdings lead to larger number of patents granted, more patent citations, and higher firm value created by patents. Connected holdings foster innovation by helping to reduce short-term capital market pressures and to increase management job security.

Introduction:

Hongxun Ruan is a Ph.D. candidate in Finance at The Wharton School, University of Pennsylvania. His main research interests are Empirical Corporate Finance, Innovation, Institutional Investors, Investment, Industrial Organization. He holds a BS in Electrical Engineering from Shanghai Jiao Tong University. He holds a MS in Telecommunication and Networks from University of Pennsylvania.

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