Innovation and Stock Prices: a Review of some Recent Work

Mazzucato, Mariana

doi:10.3917/reof.073.0159

Cited by 9 publications

(14 citation statements)

References 36 publications

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“…The results indicated that domestic firms' R&D investment had a greater impact on stock prices than that of foreign firms'. Mazzucato (2006) reviewed several papers on the relationship between innovation and the stock price and indicated that studies showed that rapid changes in patents and research and development expenditure significantly changed the market value of the company. In particular, the citation weighted patents had more effect on the market value of the company.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The study also found that firms with higher R&D intensity (R&D expenditures divided by sales) had higher idiosyncratic risk with the monthly firm-level returns and the quarterly firm-level R&D intensity data of five industries from 1974-2003. 1 It was assumed that the result of industry level analysis in Mazzucato (2006) was due to the premise that innovation was fixed. In addition, many studies have investigated the relationship between industry life cycle, another means of demonstrating technological progress, and stock price.…”

Section: Literature Reviewmentioning

confidence: 99%

“…According to Mazzucato (2006), research indicated that innovations by new technologies have a negative impact on capital due to existing technology, resulting in a decline in average industry stock prices. She reviewed a paper that showed that the degree to which stock price was more volatile than the value that was calculated by the efficient market model peaked during the Second and Third Industrial Revolutions due to herd effects, bandwagon effects, and animal spirits in agents' behavior.…”

Section: Literature Reviewmentioning

confidence: 99%

“…She reviewed a paper that showed that the degree to which stock price was more volatile than the value that was calculated by the efficient market model peaked during the Second and Third Industrial Revolutions due to herd effects, bandwagon effects, and animal spirits in agents' behavior. Mazzucato (2006) also provided the foundation for a Schumpeterian analysis. Greenwood and Jovanovic (1999) investigated the relationship between the Information Technology (IT) Revolution and the stock market changes.…”

Section: Literature Reviewmentioning

confidence: 99%

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The Relationship between Technology Life Cycle and Korean Stock Market Performance

Lee

2018

IJFS

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Through the three industrial revolutions, technology has enabled rapid changes in society. In a capitalist society, capital is invested where there is utility, for example, economic benefit. We intend to determine that the stock price of a company that uses a particular technology will change with the life cycle of the technology in question. Specifically, we filtered companies that mainly deal with augmented reality and are listed in Korea’s KOSDAQ market. We grouped these companies based on detailed technologies that constitute augmented reality. We used the event study method to calculate the stock returns against a benchmark. As a result, in the “Peak of Inflated Expectations” stage, the portfolios of all companies using augmented reality generally show higher returns than the benchmark. However, it is difficult to ascertain whether a return generated based on one of the detailed technologies that make up augmented reality is higher or lower than that of the benchmark. During the “Trough of Disillusionment” phase, there was neither a consistent trend of cumulative abnormal returns (CAR) nor buy-and-hold abnormal returns (BHAR). However, during this stage, there was a positive correlation of average BHAR and average abnormal returns between the entire sample’s portfolio and each detailed technology firm’s portfolio.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

The Relationship between Technology Life Cycle and Korean Stock Market Performance

Lee

2018

IJFS

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“…Insofar, scholars have explained a firm's innovative attitude with its dimension and/or the intensity of market competition (Mazzucato, 2006). However, investing in innovation strongly affects the firm's stock value: the entrepreneur who wants to push the value of his firm upwards should enhance the firm's chances of future success, and being innovative is the main way to reach this goal.…”

Section: Introductionmentioning

confidence: 99%

Innovation and stock market performance: A model with ambiguity-averse agents

Grieco

2017

J Evol Econ

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Empirical evidence on stock prices shows that firms investing successfully in radical innovation experience higher stock returns. This paper provides a model that sheds light on the relationship between the degree of firm innovativeness and stock returns, the movements of which capture expectations on firm's profitability and growth. The model is grounding on Neo-Schumpeterian growth models and relies on the crucial assumption of radical innovation, characterized by "ambiguity" or Knightian uncertainty: due to its uniqueness and originality, no distribution of probability can be reasonably associated with radical innovation success or failure. Different preferences (α-maxmin, Choquet) are here compared. Results show that the assumption of ambiguity-aversion is crucial in determining higher returns in the presence of radical innovation and that the specific definition of expected utility shapes the extent of the returns. This result holds also in the case of endogenous innovation; risk attitude plays no role.

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Firm market valuation and intellectual property assets

Dosso

Vezzani

2019

Industry and Innovation

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This paper investigates the relationship between the innovative activity of the top corporate R&D investors worldwide and their market valuation. The analysis exploits a sample of more than 1,250 publicly listed Multinational Corporations (MNCs) and their intellectual property rights (IPR)patents and trademarks -filed between 2005 and 2012. The study contributes to the literature on the IPRmarket value link by examining the premium resulting from the interactive use of different IPR. Moreover, the empirical setting allows differentiating the effects of an increase in market value derived from additional IPR (within-effects) with respect to the premium received for holding more IPR than the competitors (between-effects). The findings suggest that investors value the simultaneous use of the two IPRs and form their expectations by benchmarking firms. Finally, significant industrial specificities are observed in the individual effects of patents, trademarks and their interactions on the market value of firms.

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Innovation and Stock Prices: a Review of some Recent Work

Cited by 9 publications

References 36 publications

The Relationship between Technology Life Cycle and Korean Stock Market Performance

The Relationship between Technology Life Cycle and Korean Stock Market Performance

Innovation and stock market performance: A model with ambiguity-averse agents

Firm market valuation and intellectual property assets

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