Mispricing vs risk premia in R&D-intensive firms
We utilize the NBER's patent database to reevaluate relationships between R&D on the one hand and firm fundamentals and stock returns on the other. Patent counts and patent citations are used to measure R&D quantity and quality respectively. Our R&D variables are all positively associated with growth and negatively associated with profitability. Using R&D spending and citations intensities to form stock portfolios, we are able to distinguish winners from losers. Investors who can effectively evaluate the quality of the R&D performed, may be able profitably to exploit the risk premium applied to the stock of R&D-intensive companies.
Year of publication: |
2010
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Authors: | Branch, Ben ; Chichirau, Cosette |
Published in: |
International Review of Financial Analysis. - Elsevier, ISSN 1057-5219. - Vol. 19.2010, 5, p. 358-367
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Publisher: |
Elsevier |
Keywords: | R& D Research and development Patents Patent citations NBER patent database |
Saved in:
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