What’s your Identification Strategy?

Very nice paper on the diffusion of methodological innovation in corporate finance research, forthcoming in Management Science

“What’s your Identification Strategy? Innovation in Corporate Finance Research”

Donald E. Bowen, Laurent Frésard, and Jérôme P. Taillard

We study the diffusion of techniques designed to identify causal relationships in corporate finance research. We estimate that the diffusion started in the mid-1990s, lagged 20 years compared to economics, and is now used in the majority of corporate finance articles. Consistent with recent theories of technology diffusion, the adoption varies across researchers based on individuals’ expected net benefits of adoption. Younger scholars, holders of PhDs in economics, and those working at top institutions adopt faster. Adoption is accelerated through networks of colleagues and alumni and is also facilitated by straddlers who cross over from economics to finance. Our findings highlight new forces that explain the diffusion of innovation and shape the norms of academic research.

Link to article in MS

Link to WP on SSRN

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