Do Individuals or Firms Matter More? The Case of Patent Generation

This paper studies the relative importance of individual inventors’ human capital and firms’ organizational capital in promoting a firm’s innovation output. We decompose the variation in innovation output into inventor- and firm-specific components. Inventors’ human capital is about 13 times as important as firms’ organizational capital in explaining a firm’s innovation performance in terms of patent counts and citations, while inventors’ human capital is only about the same as important when explaining the firm’s innovation styles in terms of patent exploratory and exploitive scores. In the cross section, inventors contribute more to innovation output when they are better networked, in firms with higher inventor mobility, in industries in which innovation is more difficult to achieve, and in publicly traded firms. Additional tests suggest that our main findings continue to hold after accounting for inventors’ endogenous moving. This paper highlights the importance of individual inventors in enhancing firm innovation and sheds new light on the theory of the firm.

Joint Leverage and Maturity Choices in Real Estate Firms: The Role of the REIT Status

We explore the interdependence of leverage and debt maturity choices in Real Estate Investment Trusts (REITs) and unregulated listed real estate investment companies in the U.S. for the period 1973-2011. We find that the leverage and maturity choices of all listed real estate firms are interdependent, but in contrast to industrial firms, they are not made simultaneously. Across the different types of real estate firms considered, we find substantial differences in the nature of the relationship between leverage and maturity. Leverage determines maturity in non-REITs, whereas maturity is a determinant of leverage in REITs. We suggest that the observed differences reflect the effects of the REIT regulation, rather than solely being a function of real estate as the underlying asset class. We also present novel evidence that the relationship between leverage and maturity in both firm types can be used to moderate the effects of other exogenous financing policies.

On the Capital Structure of Real Estate Firms

The leverage and debt maturity choices of real estate companies are interdependent, and are not made separately as is often assumed in the literature. We use three-stage least squares (3SLS) regression analysis to explore this interdependence for a sample of listed U.S. real estate companies and Real Estate Investment Trusts (REITs) traded between 1973 and 2006.We find substantial differences in the nature of the relationship between leverage and maturity for the two firm types. Leverage is a determinant of maturity for non-REITs, whereas maturity is a determinant of leverage for REITs. We also find that the drivers of capital structure choices in real estate companies and REITs clearly reflect the effects of the REIT regulation.