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 - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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.:
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KITeS Working Papers
186, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2006.
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- 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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"Industry Effects and Appropriability Measures in the Stock Markets Valuation of R&D and Patents,"
NBER Working Papers
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