IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v43y1997i4p422-436.html
   My bibliography  Save this article

Delays in New Product Introductions and the Market Value of the Firm: The Consequences of Being Late to the Market

Author

Listed:
  • Kevin B. Hendricks

    (School of Business, College of William and Mary, Williamsburg, Virginia 23187)

  • Vinod R. Singhal

    (School of Management, Georgia Institute of Technology, Atlanta, Georgia 30332)

Abstract

This paper empirically estimates the impact of not meeting promised new product introduction dates on the market value of the firm. We estimate the average "abnormal" change in the market value for a sample of 101 firms around the date when information about delaying the introduction of new products is publicly announced. On average, delay announcements decrease the market value of the firm by 5.25%. The average dollar change in the market value in 1991 dollars is $-119.3 million. The evidence suggests that there are significant penalties for not introducing new products on time. To provide further insight, regression analyses are used to identify factors that influence the direction and magnitude of the change in market value. We find that the competitiveness of the industry in which the firm operates, the size of the firm, and the firm's degree of diversification are statistically significant predictors for the change in the market value of firms that announce delays in the introduction of new products.

Suggested Citation

  • Kevin B. Hendricks & Vinod R. Singhal, 1997. "Delays in New Product Introductions and the Market Value of the Firm: The Consequences of Being Late to the Market," Management Science, INFORMS, vol. 43(4), pages 422-436, April.
  • Handle: RePEc:inm:ormnsc:v:43:y:1997:i:4:p:422-436
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.43.4.422
    Download Restriction: no

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:43:y:1997:i:4:p:422-436. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.