Impact of R&D, patents and innovations disclosure on market capitalization: Russian evidence

Abstract

PurposeThe paper examines whether, along with the financial performance, the disclosure of research and development (R&D) expenses, patent portfolios, patent citations and innovation activities affect the market capitalization of Russian companies.Design/methodology/approachThe paper opted for a set of techniques including bag-of-words (BoW) to retrieve additional innovation-related data from companies' annual reports, self-organizing maps (SOM) to perform visual exploratory analysis and panel data regression (PDR) to conduct confirmatory analysis using data on 74 Russian publicly traded companies for the period 2013–2019.FindingsThe paper observes that the disclosure of nonfinancial data on R&D, patents and primarily product and marketing innovations positively affects the market capitalization of the largest Russian companies, which are mainly focused on energy, raw materials and utilities and are operating on international markets. The study suggests that these companies are financially well-resourced to innovate at risk and thus to provide positive signals to stakeholders and external agents.Research limitations/implicationsOur findings are important to management, investors, financial analysts, regulators and various agencies providing guidance on corporate governance and sustainability reporting. However, the authors acknowledge that the research results may lack generalizability due to the sample covering a single national context. Researchers are encouraged to test the proposed approach further on other countries' data by using the compiled lexicons.Originality/valueThe study aims to expand the domains of signaling theory and market valuation by providing new insights into the impact that companies' reporting on R&D, patents and innovation activities has on market capitalization. New nonfinancial factors that previous research does not investigate – innovation disclosure indicators (IDI) – are tested.

Does Technological Innovation Efficiency Improve the Growth of New Energy Enterprises? Evidence from Listed Companies in China

“…For every 1% increase in MS and TE, EG will increase by 0.316% and 0.174%, respectively. This indicates that the improvement of technological innovation efficiency can effectively expand an enterprise's market shares and bring huge development space and competitive advantages, which is consistent with the findings of Liu et al [99]. MS plays a mediating role between TE and EG.…”