Abstract
This paper quantifies the impact of corporate innovation on corporate tangible investment for a large panel of U.S. firms. We show that corporate innovation (research and development, patents, citations, and patent value) positively influences tangible investment and the manner in which this effect transpires is characterized by a firm's external/internal dependence on finance, technological intensity, size, maturity, and payout policy. We discover that input- and output-type innovations affect corporate investment differently, with research and development (patent value) having the least (most) effect on investment. Our analysis reveals that corporate innovation moves investments more during economic expansions than during recessions.
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