臺大管理論叢第31卷第2期

150 The Impact of the Act for the Development of Biotech and New Pharmaceuticals Industry on Firm Innovation in Taiwan Second, in the inter-industry comparison, firms in the biopharmaceutical industry have smaller firm size, lower leverage, net sales, operating performance, and higher firm value than firms in the high-tech industry. In addition, compared with those in hightech industry, firms in the biopharmaceutical industry have lower patent numbers, patent adjusted citations, and R&D expenditure, i.e. lower innovation input and output. However, firm sizes (i.e. total asset and/or net sales) of the biopharmaceutical industry are much smaller than those of firms in the high-tech industry, giving biopharmaceutical firms a higher proportion of R&D expenditure to firm size. 4.2 Effectiveness of PSM To examine whether PSM helps to prevent the selection bias problem, we compare the pre-event firm characteristics between the treated firms (i.e. approved biopharmaceutical firms) and control firms. Table 2 presents the comparison of the preevent firm characteristics between these two groups. The data of firm characteristics are at year t-1 where t is the approval year of the treated firms. This table shows one, two, three, and four control firms which have the first, second, third, and fourth-nearest propensity scores to the treated firms. In Table 2, Panel A shows the comparison between approved biopharmaceutical firms and unapproved biopharmaceutical firms. In the scenario of one control firm, all characteristics for the treated firms and control firms are not significantly different. Except for the ROA for the second, third, and fourth control firms, other characteristics of these firms are also not significantly different. Accordingly, among the unapproved biopharmaceutical firms, the control firms selected by PSM are quite similar to the approved biopharmaceutical firms. Panel B of Table 2 shows the comparison between approved biopharmaceutical firms and high-tech firms. Among the high-tech firms, the control firms selected by PSM are similar to the treated firms in ROA and R&D intensity. 26 Overall, by assuring that the pre-event firm characteristics of the treated firms and control firms are similar, we confirm that PSM alleviates the sample selection problem of control firms. 26 Since the firm characteristics in different industries are quite different, we do not obtain similar results for total assets and Tobin’s Q.

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