Product market competition, R&D investment, and stock returns

• 成果类型: Article
• 署名作者: Gu, Lifeng
• 署名单位: University of Hong Kong; University of Hong Kong
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.09.008
• 发表日期: 2016
• 页码: 441-455
• 关键词: Research and development investment; Product market competition; Risk premium; stock returns

摘要

A standard real options model predicts a strong positive interaction effect between research and development (R&D) investment and product market competition. R&D-intensive firms tend to be riskier and earn higher expected returns than R&D-weak firms, particularly in competitive industries. Also, firms in competitiye industries earn higher expected returns than firms in concentrated industries, especially among R&D-intensive firms. Intuitively, R&D projects are more likely to fail in the presence of more competition because rival firms could win the innovation race. Empirical evidence largely supports the model's predictions. (C) 2015 Elsevier B.V. All rights reserved.