The Stock Market Valuation of R&D Leaders
We examine future excess returns, earnings variability and stock volatility of Ramp;D Leaders and Followers. Drawing on the business strategy literature, which makes a clear distinction between Ramp;D Leaders and Followers, we show that Ramp;D Leaders do earn significant future excess returns, while Ramp;D Followers just earn average returns. We further document that Ramp;D Leaders generate higher future sales growth, and return-on-assets than Followers. We also tackle the perennial question of whether the excess returns subsequent to Ramp;D are due to mispricing or risk, and show that only a small part of the returns can be attributed to risk compensation. Finally, it has been documented that Ramp;D expenditures are strongly associated with future earnings volatility, suggesting that Ramp;D is less reliable (verifiable) an asset than physical capital. We show that the association between Ramp;D intensity and future earnings volatility of Ramp;D Leaders is not lower than that of Ramp;D Followers. Thus, penetrating the population of Ramp;D firms to distinguish between Ramp;D Leaders and Followers, we bridge the chasm between the major findings of the economics/finance strand and the accounting body of Ramp;D research
Year of publication: |
[2008]
|
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Authors: | Lev, Baruch |
Other Persons: | Radhakrishnan, Suresh (contributor) ; Ciftci, Mustafa (contributor) |
Publisher: |
[2008]: [S.l.] : SSRN |
Saved in:
freely available
Extent: | 1 Online-Ressource (54 p) |
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Series: | NYU Working Paper ; No. BARUCH LEV-15 |
Type of publication: | Book / Working Paper |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 2006 erstellt |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012770014
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