Review of Finance Vol. 20 No. 5 2016
R&D Spillover and Predictable Returns
open access
Abstract
We show that firms’ R&D activities can predict the stock returns of their industry peers. When an industry experiences substantial R&D growth driven by the activities of a small group of firms, industry peers experience positive abnormal returns and abnormal operating performance despite having no aggressive R&D growth. Exogenous industry shocks to demand or productivity do not explain these results. Further, abnormal returns are concentrated in peer firms that receive low investor attention.
- DOI
- 10.1093/rof/rfv050
- Volume
- 20
- Issue
- 5
- Pages
- 1769-1797
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref