Market value of the firms and R&D investment: Theoretical overview and empirical estimation for the panel of countries
AbstractThe aim of this paper is to investigate the issue of R&D investment and the market value of the firm. This idea dating back from Arrow paper, later developed by Paul Romer but in the area of economic growth. Zvi Griliches (1979), first introduced the production function, which later would be used in a vast literature from this area (Market value of the firms and R&D investment). In the theoretical section of this paper we are describing Tobin’s original model, and Abel’s (1984) model, this models relates Tobin’s quotient with intangible assets of the company. In the empirical part we develop cross-section time series model (Feasible Generalized Least Squares Model), for a panel of countries in Europe including UK and Turkey, in total of 11 panels. Later we test that model by estimating the marginal effects of R&D investment with Tobin’s q on a small economy such as R. Macedonia. The results exert positive and statistically significant relationship between market value of the firms and R&D investment.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 44094.
Date of creation: 31 Jan 2013
Date of revision:
Tobin’s q; R&D; knowledge absorption;
Other versions of this item:
- Josheski, Dushko & Magdinceva Sopova, Marija, 2013. "Market value of the firms and R&D investment: Theoretical overview and empirical estimation for the panel of countries," EconStor Preprints 68488, ZBW - German National Library of Economics.
- D46 - Microeconomics - - Market Structure and Pricing - - - Value Theory
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-CSE-2013-02-03 (Economics of Strategic Management)
- NEP-INO-2013-02-03 (Innovation)
- NEP-KNM-2013-02-03 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2013-02-03 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
- Missaka Warusawitharana, 2008. "Research and development, profits and firm value: a structural estimation," Finance and Economics Discussion Series 2008-52, Board of Governors of the Federal Reserve System (U.S.).
- Bronwyn H. Hall & Grid Thoma & Salvatore Torrisi, 2007.
"The market value of patents and R&D: Evidence from European firms,"
NBER Working Papers
13426, National Bureau of Economic Research, Inc.
- Bronwyn H. Hall & Grid Thoma & Salvatore Torrisi, 2006. "The market value of patents and R&D: Evidence from European firms," KITeS Working Papers 186, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.
- Iain Cockburn & Zvi Griliches, 1987.
"Industry Effects and Appropriability Measures in the Stock Markets Valuation of R&D and Patents,"
NBER Working Papers
2465, National Bureau of Economic Research, Inc.
- Cockburn, Iain & Griliches, Zvi, 1988. "Industry Effects and Appropriability Measures in the Stock Market's Valuation of R&D and Patents," American Economic Review, American Economic Association, vol. 78(2), pages 419-23, May.
- Connolly, Robert A & Hirschey, Mark, 1984. "R&D, Market Structure, and Profits: A Value-Based Approach," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 682-86, November.
- Megna, Pamela & Klock, Mark, 1993. "The Impact on Intangible Capital on Tobin's q in the Semiconductor Industry," American Economic Review, American Economic Association, vol. 83(2), pages 265-69, May.
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