R&amp;D volatility and market value: the role of executive overconfidence

Hai, Benlu; Gao, Qingzhu; Yin, Ximing; Jin, Chen

doi:10.1108/cms-05-2019-0170

Cited by 7 publications

(20 citation statements)

References 62 publications

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“…Therefore, they are likely to cause under-investment (Landier and Thesmar, 2009;Huang et al, 2011). As overconfident executives advocate freedom and liberation, are more radical, and have the courage and determination to carry out highinput, high-risk, and high-uncertain R&D activities, they are willing to accept challenges and increase R&D investment, enhance the firms' learning and absorptive capacity, enable the firm to maintain a high level of competition, and thus improve the firms' performance significantly (Hirshleifer et al, 2012;Hai et al, 2020).…”

Section: Executive Characteristics and Environmental Information Disclosurementioning

confidence: 99%

Government Regulation, Executive Overconfidence, and Carbon Information Disclosure: Evidence From China

et al. 2021

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Climate change has put countries around the world under great pressure to reduce greenhouse gas emissions. Chinese government has proposed that China will strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. A low-carbon lifestyle is becoming a new trend in China. Therefore, the products of firms that actively respond to climate change are more popular for consumers in China. In the Internet era, the carbon information disclosed by firms has become an important way for consumers to understand the behavior of firms in responding to climate change. In the existing literature on the influencing factors of carbon information disclosure, the psychological factors of executives are seldom investigated. Using a sample of Chinese listed firms in low-carbon pilot provinces and cities during the period of 2015–2019, this study explores the influence of government regulation and executive overconfidence on the quality of carbon information disclosure. The results show that government regulation has a significantly positive impact on the quality of carbon information disclosure. The results also reveal that executive overconfidence negatively affects the quality of carbon information disclosure. Moreover, executive overconfidence negatively moderates the relationship between government regulation and the quality of carbon information disclosure. Our findings make a significant contribution to the role of executive’s psychological factors in firm’s behaviors and provide new insights and policy implications for government, firms, consumers, and other stakeholders.

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Section: Executive Characteristics and Environmental Information Disclosurementioning

confidence: 99%

Government Regulation, Executive Overconfidence, and Carbon Information Disclosure: Evidence From China

et al. 2021

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“…Therefore, values can also influence consumers' judgments about products (Yang et al, 2020). Among other things, values influence attitudes, attributes, consequences, or consumption values, which in turn influence product choice (Hai et al, 2019). Human values indirectly influence product choice when consumers evaluate the utilitarian meaning represented by the product's visible function (Gueli et al, 2019).…”

Section: Values In Marketing (Materials and Non-material)mentioning

confidence: 99%

The Relationship between Consumers‘ Characteristics and the Expectations towards a Brand‘s Value

Rzemieniak¹,

Wyrwisz²,

Toborek³

2021

ERSJ

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Purpose: The subject of this article is the identification and evaluation of communicated values and values actually declared by consumers' gender and age.Design/Methodology/Approach: The article presents a research approach based on a literature query and empirical research. Beginning by presenting the essence of both material and non-material values in marketing, the focus is on the values pyramid communicated by brands. The empirical research was conducted by the method of a diagnostic survey using a questionnaire on a representative sample of 1000 respondents. The principal research was preceded by a pilot survey. The research results were statistically processed using the Chi-square test of independence, the Mann-Whitney U test, the Kruskal-Wallis test, post-hoc Dunn test with Benjamini-Hochberg correction. Findings: The research analysis indicates differences in the assessment of declared and expected values towards cosmetic product brands between women and men, in particular concerning functional and life-changing values. The assessment of the declared and expected values also changes depending on age. Substantially different assessment is shown by the group of the youngest respondents. A particular difference is noticeable concerning the aesthetic value, the brand prestige and the heritage, tradition, as well as brand history.Practical Implications: To develop the brand management capability, organizations may benefit from cultivating processes that seek to meet the latent customer needs through explorative and proactive information seeking, and at the same time, pursuing processes that focus on capturing the existing customer and competitor trends in the market. Originality/Value: This study borrows from the existing research on market orientation, branding and brand management to argue that organizations are required to verify the actual expected values towards brands. Enterprises should also verify the consistency of the values declared by brands with those actually expected by consumers.

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“…The difficulty in demonstrating the link between the volatility of R&D expenditure and the value of the company means that this topic continues to be of interest in the literature. Previous scientific evidence shows that fluctuations in the market value of entities correlate with the volatility of R&D expenditure (Hai et al, 2019). Other studies indicate a heterogeneous and weak link between R&D expenditure and share price, thus casting doubt on the assumed importance of R&D expenditure and their volatility for investors (Jeny & Moldovan, 2018).…”

Section: Introductionmentioning

confidence: 99%

“…Knowing that outside investors associate intensive investments with risk and information asymmetry, companies are sending a favourable signal to the foreign market by lowering the IPO. Hai et al (2019) link the volatility of R&D expenditure to two distinct innovation strategies (exploratory innovation and exploitative innovation), which compete in terms of corporate resources and create organizational tensions. The exploratory innovation strategy or radical innovation involves the development of new technologies and opportunities, creates new market segments for products/processes (Wang et al, 2022) and targets the future viability of the company.…”

Section: Introductionmentioning

confidence: 99%

“…Companies in leading industries are wavering between exploratory innovation and exploitative innovation, driven by the technological rivalry between incumbents and new entrants (Bustinza et al, 2019), which results in R&D expenditure variation. Hai et al (2019) assign the name of "positive volatility" to the increase in R&D expenditure due to the transition of companies from exploitative innovation to exploratory innovation. The compression of R&D expenditure resulted from the replacement of the exploratory innovation strategy with the exploitative innovation, reflects the "negative volatility" of R&D expenditure.…”

Section: Introductionmentioning

confidence: 99%

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FINANCIAL MARKET REACTION TO R&D VOLATILITY IN THE PHARMACEUTICAL INDUSTRY. A MULTI-COUNTRY STUDY

Mironiuc

Huian

Țaran

et al. 2022

Journal of Business Economics and Management

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Corporate management is often accused of short-term oriented behaviour related to R&D expenditures. This study analyses the influence of R&D volatility and R&D intensity on the market capitalization of pharmaceutical and medical research companies from Europe, considering the institutional context and several firm characteristics. Panel regression estimations on a sample of 217 companies for 2014–2019 indicate that R&D volatility adversely affects market value. The analysis is conducted on the entire sample and on sub-samples determined based on the positive and negative values of the R&D volatility. This differentiates between the continuous and the disrupting effect of R&D activities and the firm’s shift between exploratory and exploitative innovations. The positive volatility sub-sample provides consistent evidence of a significant negative influence of the R&D volatility on the market value. For the negative volatility sub-sample, R&D intensity and its interaction with R&D volatility have a significant positive effect, consistent over the alternative estimations. We conclude that the market influence of the R&D expenditure is related to the sign of volatility and depends on the proportion of R&D expenditure, especially when the volatility is negative. Our findings provide valuable insights for managers, investors, analysts, and other stakeholders about the market reaction to R&D volatility.

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R&D volatility and market value: the role of executive overconfidence

Cited by 7 publications

References 62 publications

Government Regulation, Executive Overconfidence, and Carbon Information Disclosure: Evidence From China

Government Regulation, Executive Overconfidence, and Carbon Information Disclosure: Evidence From China

The Relationship between Consumers‘ Characteristics and the Expectations towards a Brand‘s Value

FINANCIAL MARKET REACTION TO R&D VOLATILITY IN THE PHARMACEUTICAL INDUSTRY. A MULTI-COUNTRY STUDY

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