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The Real Effect of Smoking Bans: Evidence from Corporate Innovation

Published online by Cambridge University Press:  17 December 2018

Huasheng Gao Open the ORCID record for Huasheng Gao [Opens in a new window] ,
Po-Hsuan Hsu Open the ORCID record for Po-Hsuan Hsu [Opens in a new window] ,
Kai Li Open the ORCID record for Kai Li [Opens in a new window]  and
Jin Zhang
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Abstract

We identify a positive causal effect of healthy working environments on corporate innovation, using the staggered passage of U.S. state-level laws that ban smoking in workplaces. We find a significant increase in patents and patent citations for firms headquartered in states that have adopted such laws relative to firms headquartered in states without such laws. The increase is more pronounced for firms in states with stronger enforcement of such laws and in states with weaker preexisting tobacco controls. We present suggestive evidence that smoke-free laws affect innovation by improving inventor health and productivity and by attracting more productive inventors.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 55 , Issue 2 , March 2020 , pp. 387 - 427
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2018 

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Footnotes

1

We are grateful for helpful comments from an anonymous referee, Renee Adams, Neal Ashkanasy, Patrick Bolton, James Brugler, Hui Chen, David Feldman, Tim Folta, Neil Galpin, Alfonso Gambardella, Brad Greenwood, Bruce Grundy, David Hsu, Xu Huang, Gur Huberman, Chuan Yang Hwang, Boyan Jovanovic, Dan Li, Feng Li, Chen Lin, TC Lin, William Mann, Nadia Massoud, Ron Masulis, Yifei Mao, Ivan Png, David Reeb, Ravi Sastry, Robert Seamans, Thomas Schmid, Wes Sine, Avanidhar Subrahmanyam, Peter Swan, Lewis Tam, Wing Wah Tham, Xuan Tian, Sheridan Titman, Cameron Truong, John Van Reenen, Sid Vedula, Betty Wu, Ting Xu, Hong Yan, Bohui Zhang, Joe Zou, seminar participants at Hong Kong Baptist University, Monash University, Nanyang Technological University, Shanghai Advanced Institute of Finance, University of Glasgow, University of Hong Kong, University of Melbourne, and University of New South Wales, and conference participants at the Darden and Cambridge Judge Entrepreneurship and Innovation Research Conference, the Asian Development Bank Institute (ADBI) Finance and Innovation Conference, the Financial Management Association (FMA) Asia Pacific Conference, and the China International Conference in Finance. We thank Yen-Teik Lee for research assistance. Gao acknowledges financial support from Shanghai Pujiang Program. Hsu acknowledges financial support from Ministry of Education and Ministry of Science and Technology in Taiwan (MOE Grant No. 108L900202 and MOST Grant No. 108-3017-F-002-003). Li acknowledges financial support from the Social Sciences and Humanities Research Council of Canada (SSHRC Grant No. 435-2013-0023). All errors are our own.

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