Journal of Financial Economics Vol. 40 No. 3 1996
An empirical analysis of strategic competition and firm values the case of R&D competition
Abstract
We operationalize a firm's competitive strategy through a new empirical measure, and develop a framework for empirical analysis of the market value of strategic behavior. Using this framework, we study announcement effects of R&D spending. The announcing firm's stock prices are positively influenced by a change in spending, and negatively by our competitive strategy measure (CSM). Competitors' stock prices are positively influenced by the interaction between the market's reaction to the announcing firm and the CSM. Our results are consistent with positive effects of ‘accommodating’ competition with strategic substitutes, and nonpositive effects of ‘tough’ competition with strategic complements.
- DOI
- 10.1016/0304-405x(95)00853-7
- Volume
- 40
- Issue
- 3
- Pages
- 459-486
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib