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- Publisher Website: 10.1177/0001839220927350
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Article: Fraud and Innovation
Title | Fraud and Innovation |
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Authors | |
Keywords | Fraud Innovation State subsidy Emerging markets |
Issue Date | 2021 |
Publisher | Sage Publications, Inc. The Journal's web site is located at http://asq.sagepub.com/ |
Citation | Administrative Science Quarterly, 2021, v. 66 n. 2, p. 267-297 How to Cite? |
Abstract | We show that fraudulent firms allocate resources differently than honest companies. Resources obtained through fraudulent means are likely to be viewed as unearned gains and are less likely to be invested in productive activities, such as recruiting talent. We posit that honest and fraudulent companies also invest in different types of innovation: honest firms pursue technically significant innovations, while fraudulent companies are likely to make smaller investments in less challenging inventive opportunities that contribute to the appearance rather than the substance of innovation. We test these predictions in a longitudinal dataset tracking the personnel recruitment and patenting activities of 467 Chinese high technology firms, all of which applied for state-funded innovation grants. We identify fraud by comparing two sets of financial books prepared by each company in the data in the same fiscal year, which are legally required to be identical but are discrepant in over 50 percent of cases, in a direction that benefits the firm. We find that relative to honest companies, fraudulent firms are more likely to receive state grants and are less likely to recruit new employees or produce important inventions in the post-grant period. |
Persistent Identifier | http://hdl.handle.net/10722/300871 |
ISSN | 2023 Impact Factor: 8.3 2023 SCImago Journal Rankings: 14.175 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Wang, Y | - |
dc.contributor.author | Stuart, T | - |
dc.contributor.author | Li, J | - |
dc.date.accessioned | 2021-07-06T03:11:22Z | - |
dc.date.available | 2021-07-06T03:11:22Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | Administrative Science Quarterly, 2021, v. 66 n. 2, p. 267-297 | - |
dc.identifier.issn | 0001-8392 | - |
dc.identifier.uri | http://hdl.handle.net/10722/300871 | - |
dc.description.abstract | We show that fraudulent firms allocate resources differently than honest companies. Resources obtained through fraudulent means are likely to be viewed as unearned gains and are less likely to be invested in productive activities, such as recruiting talent. We posit that honest and fraudulent companies also invest in different types of innovation: honest firms pursue technically significant innovations, while fraudulent companies are likely to make smaller investments in less challenging inventive opportunities that contribute to the appearance rather than the substance of innovation. We test these predictions in a longitudinal dataset tracking the personnel recruitment and patenting activities of 467 Chinese high technology firms, all of which applied for state-funded innovation grants. We identify fraud by comparing two sets of financial books prepared by each company in the data in the same fiscal year, which are legally required to be identical but are discrepant in over 50 percent of cases, in a direction that benefits the firm. We find that relative to honest companies, fraudulent firms are more likely to receive state grants and are less likely to recruit new employees or produce important inventions in the post-grant period. | - |
dc.language | eng | - |
dc.publisher | Sage Publications, Inc. The Journal's web site is located at http://asq.sagepub.com/ | - |
dc.relation.ispartof | Administrative Science Quarterly | - |
dc.subject | Fraud | - |
dc.subject | Innovation | - |
dc.subject | State subsidy | - |
dc.subject | Emerging markets | - |
dc.title | Fraud and Innovation | - |
dc.type | Article | - |
dc.identifier.email | Wang, Y: wyanbo@hku.hk | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1177/0001839220927350 | - |
dc.identifier.scopus | eid_2-s2.0-85086248114 | - |
dc.identifier.hkuros | 323331 | - |
dc.identifier.volume | 66 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 267 | - |
dc.identifier.epage | 297 | - |
dc.identifier.isi | WOS:000539331900001 | - |
dc.publisher.place | United States | - |