167 NTU Management Review Vol. 31 No. 2 Aug. 2021 Panel B: DID Estimator for Adjusted Patent Citations: Inter-industry Analysis t-1 t+1 Differences t-2 t+2 Differences t-3 t+3 Differences Diff.3 -0.4599 -0.1101 0.3498*** -0.2479 -0.1313 0.1166 -0.0731 -0.0976 -0.0245 (0.0014) (0.1526) (0.7009) Diff.4 -0.3911 -0.0817 0.3094*** -0.1918 -0.0976 0.0942 -0.0590 -0.0720 -0.0130 (0.0034) (0.1337) (0.8247) Note: This table presents the DID estimator of innovation for the inter-industry analysis. Panels A and B present the DID estimator of R&D investment and the DID estimator of adjusted patent citations, respectively. t is the event year, i.e. the year in which the Biopharmaceutical firm is approved by the Biopharmaceutical Act. Treated represents the treated firms, i.e. approved biopharmaceutical firms. Control 1, Control 2, Control 3, and Control 4 respectively represent one, two, three, and four control firms to each treated firm. The control firms in the inter-industry analysis are high-tech firms. Diff.1, Diff.2, Diff.3, and Diff.4 represent the mean difference in the variables between Treated and Control 1, Control 2, Control 3, and Control 4 respectively. Numbers in the parentheses are p-values. ***,**, and * denote significance at the 1%, 5%, and 10% levels, respectively. Panel A of Table 7 shows that the high-tech firms significantly decrease their R&D investment after the approval year although the approved biopharmaceutical firms do not change the proportions of R&D. The significantly positive DID estimators of R&D investment show that after the Biopharmaceutical Act, compared with high-tech firms, approved biopharmaceutical firms have a significantly higher proportion of R&D expenditure to total assets. Panel B of Table 7 for the time interval (t-1, t+1) analysis demonstrates that hightech firms significantly decrease their adjusted patent citations after the Biopharmaceutical Act. In this short time interval, the DID estimators of the adjusted patent citations are significantly positive, implying that the approved biopharmaceutical firms have significantly higher innovation output than high-tech firms after the Biopharmaceutical Act. However, the DID estimator results for time interval (t-2, t+2) and (t-3, t+3) are not significant. Therefore, the results show that the effect of the Biopharmaceutical Act on the innovation quality of the biopharmaceutical industry is less significant, and has only a short duration. This result of a short run effect is consistent with David et al. (2000). 4.4.2 Difference-in-differences Regression (DID Regression) Table 8 shows the DID regression results for the inter-industry analysis. In Panel A, the significantly negative coefficients of Treatment show that the approved Table 7 DID Estimator: Inter-industry Analysis (cont.)

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