The Stock Market in the Driver's Seat! Implications for R&D and Marketing

• 成果类型: Article
• 署名作者: Chakravarty, Anindita; Grewal, Rajdeep
• 署名单位: University System of Georgia; University of Georgia; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1110.1317
• 发表日期: 2011
• 页码: 1594-1609
• 关键词: finance; Marketing; research and development

摘要

The budgets for research and development (R&D) and marketing should be determined by managers to attain product market advantages. However, in response to investor expectations for short-term stock returns, managers may modify these budgets myopically to avoid unexpected short-term earnings shortfalls, at the cost of long-term profitability. We propose that the past behavior of firm stock returns and volatility may create investor expectations of short-term financial performance, which drives managers to modify either R&D or marketing budgets or both. In the context of high-technology firms, a Bayesian vector autoregression model, supported by content analysis, shows that few firms exhibit high levels of managerial myopia by simultaneously cutting both R&D and marketing budgets; instead, firms display moderate myopic reactions, in the form of unanticipated decreases in R&D budgets but increased budgets for marketing functions. The tendency to manage myopically in response to past stock returns and volatility increases as firm size or industry concentration decrease.