The R&D Premium and Takeover Risk

• 成果类型: Article
• 署名作者: Lin, Ji-Chai; Wang, Yanzhi (Andrew)
• 署名单位: Hong Kong Polytechnic University; National Taiwan University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51270
• 发表日期: 2016
• 页码: 955-971
• 关键词: Financial constraints; cross-section; development investment; returns; EFFICIENCY; earnings

摘要

To explain why firms with high research and development (R&D) intensity offer their investors higher stock returns, we argue that (1) high R&D capacity relative to firm valuation makes R&D-intensive firms attractive takeover targets, and that (2) the higher takeover probability leads their investors to face higher takeover risk, as proposed by Cremers, Nair, and John (2009), and require higher returns. We find evidence consistent with our hypothesis. Furthermore, we find that takeover probability also relates to large R&D increases, but not to innovation efficiency. Accordingly, we expect and find that takeover risk helps to explain the premium associated with large R&D increases, but not the innovation efficiency premium previously documented.