R&amp;D Spillover Effects and Firm Performance Following R&amp;D Increases

Chen, Sheng Syan; Chen, Yan Shing; Liang, Woan-lih; Wang, Yanzhi

doi:10.1017/s0022109013000574

Cited by 41 publications

(18 citation statements)

References 91 publications

(140 reference statements)

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“…The first of all, the main driver in the support of R&D is a private sector as in the US as in Germany. We can find the same findings in papers of Azoulay et al (2019), Brown et al (2017), Chen et al (2013), Jiang (2016) Ivanova and Cepel (2018) and Blanco et al (2020). The novelty or added value of our approach is in searching relationshi among the stock market 1development and GDP growth, while controlling for the effects of technological innovations.…”

Section: Discussionsupporting

confidence: 75%

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Government expenditures in the support of technological innovations and impact on stock market and real economy: the empirical evidence from the US and Germany

Kotlebová

Árendáš

Chovancová

2020

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Research background: The current changes in the global stock markets are related to the next wave of the industrial revolution ?Industry 4.0?. It is expected that the Industry 4.0 will lead to an acceleration of the innovation process and growth of volumes of tailor-made products. The stock markets started to react to the upcoming technological changes over the last decade, which are reflected by the changes in the composition of the major stock indices where the technological sector started to grow in importance. But innovations are not only connected with the specialized technological sector, but they are also of direct concern to the whole spectrum of economic entities. Besides the private investments that are usually allocated via the stock market, also the public sector investments play an important role. Purpose of the article: The aim of this paper is to investigate the relationship between government expenditures on research and development (R&D) and stock markets (and GDP) in the US and in Germany. Methods: We use the tools of descriptive analysis as well as correlation and regression methods of estimation. Findings & Value added: Our research confirms that the collection of data on R&D on annual basis for Germany and the US is insufficient for analytical and systemic management purposes. The real effects of investments in the R&D are time lagged. The regression analysis of annual data confirms only the statistical importance of patent applications as well as interest rate and stock index as independent variables in explanation of variability of real economy growth during the 1985?2017 period. Our model did not prove the significance of government expenditures. We can explain it, among others, by the fact that governments do not pay sufficient attention to the challenges yet, which are associated with the Industry 4.0, especially in the US, where the government expenditures in R&D gradually decrease. The governments in both economies try to increase their support, but fiscal sustainability is a limiting factor.

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Section: Discussionsupporting

confidence: 75%

“…The practice shows that a spill-over effect of the research and development expenditures exists. This issue was investigated by Chen et al (2013Chen et al ( , pp. 1607Chen et al ( -1634 who come to several interesting findings in the US.…”

Section: Literature Reviewmentioning

confidence: 99%

Government expenditures in the support of technological innovations and impact on stock market and real economy: the empirical evidence from the US and Germany

Kotlebová

Árendáš

Chovancová

2020

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“…Examples of issues examined by empirical studies are the riskiness of R&D initiatives from a bondholders' perspective (Shi, 2003), the externalities of R&D activities (Chen, Chen, Liang, & Wang, 2013), the behavioural theory of the firm (O'Brien & David, 2014), the rounding phenomenon (He & Tian, 2014), the free cash flow hypothesis (Szewczyk, Tsetsekos, & Zantout, 1996), earnings management (Shust, 2015), the role of firm size (Ciftci & Cready, 2011), the effects of R&D announcement (Chan, Martin, & Kensinger, 1990;Yeh, Shu, Ho, & Su, 2012) and the responses to short term earnings targets (Garcia Osma & Young, 2009). Last but not least, one of the best known discussions is related to the value relevance of earnings and the accounting treatment of R&D expenditure (for a review of early studies, see for example Loudder & Behn, 1995;Lev & Zarowin, 1999).…”

Section: Introductionmentioning

confidence: 99%

What R&D Assets Say about Firm Profitability

Santosuosso¹

2016

IBR

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Research and development (R&D) activities are usually considered a key factor for achieving superior performances. Using a sample of 11,897 manufacturing Italian firms, we examine the relationship between R&D expenditure that is capitalized as an intangible asset and some proxies of firm profitability over a period of four years in order to explore whether R&D assets can help investors in the identification of profitable firms. Contrary to expectations, this paper found a negative and/or an insignificant association between R&D assets and proxies of firm profitability. Although there are several possible explanations for this result, what we learn from this study is that R&D assets are not on average a reliable indicator for detecting profitable firms. Research findings revealed that firms with R&D assets appear to be not so profitable, large and levered.

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“…One recent paper by Chen, Chen, Liang and Wang () also studies the stock performance of R&D firms. Our paper differs from Chen, Chen, Liang and Wang () in two ways. They focus on the stock performance of R&D investing firms, while our focus is on the stock performance of rival firms of R&D investing firms.…”

mentioning

confidence: 99%

“…One recent paper by Chen, Chen, Liang and Wang () also studies the stock performance of R&D firms. Our paper differs from Chen, Chen, Liang and Wang () in two ways.…”

mentioning

confidence: 99%

R&D Increases and Long‐Term Performance of Rivals

Chen

Hung

Wang

2014

The Financial Review

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We examine how a firm's research and development (R&D) increases affect its intraindustry competitors in the long run. Consistent with the R&D spillover hypothesis, when a firm unexpectedly increases its R&D spending, its intra-industry competitors experience improvements in operating performance and analyst forecast revisions and earn positive abnormal stock returns in the long run. The industry concentration, which is related to the firm's strategic reaction, is crucial in determining the magnitude of the R&D spillover effect.

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R&D Spillover Effects and Firm Performance Following R&D Increases

Cited by 41 publications

References 91 publications

Government expenditures in the support of technological innovations and impact on stock market and real economy: the empirical evidence from the US and Germany

Government expenditures in the support of technological innovations and impact on stock market and real economy: the empirical evidence from the US and Germany

What R&D Assets Say about Firm Profitability

R&D Increases and Long‐Term Performance of Rivals

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