An analysis of the R&D effect on stock returns for European listed firms
Almost all studies on research and development (R&D) activity are based on US and British companies, and most of them show that this activity positively influences both stock returns and corporate value. This empirical study evaluates the effects of R&D on stock returns for a sample of listed companies from thirteen European countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Spain, Sweden and United Kingdom. We find that this effect is positive, and also significant, in predicting future returns.Other variables appear to be important too, such as book-to-market ratio and firm size. We also test a different set of hypotheses that aim to capture the many differences and peculiarities between these countries such as the development of the national equity and credit markets, the grade of disclosure for listed firms and the protection of minority shareholders. Generally, financial markets value R&D investment better in investorfriendly environments and those with a high level of legal protection.
|Date of creation:||2011|
|Publication status:||Published in European Journal of Financial Research 4.1(2011): pp. 482-496|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Rafael Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2006.
"What Works in Securities Laws?,"
Journal of Finance,
American Finance Association, vol. 61(1), pages 1-32, February.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, "undated". "What Works in Securities Laws?," Working Paper 19491, Harvard University OpenScholar.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2006. "What Works in Securities Laws?," Scholarly Articles 27867135, Harvard University Department of Economics.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2003. "What Works in Securities Law?," NBER Working Papers 9882, National Bureau of Economic Research, Inc.
- A. Al-Horani & P. F. Pope & A. W. Stark, 2003. "Research and Development Activity and Expected Returns in the United Kingdom," Review of Finance, European Finance Association, vol. 7(1), pages 27-46.
- repec:hrv:faseco:30747191 is not listed on IDEAS
- Stephen Bond & Julie Ann Elston & Jacques Mairesse & Benoît Mulkay, 2003. "Financial Factors and Investment in Belgium, France, Germany, and the United Kingdom: A Comparison Using Company Panel Data," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 153-165, February.
- Black, Angela J & Fraser, Patricia, 2000. "International Comparisons on Stock Market Short-Termism: How Different Is the UK Experience?," Manchester School, University of Manchester, vol. 68(0), pages 38-50, Supplemen.
- Rafael La porta & Florencio Lopez-De-Silanes & Andrei Shleifer & Robert Vishny, 2002.
"Investor Protection and Corporate Valuation,"
Journal of Finance,
American Finance Association, vol. 57(3), pages 1147-1170, June.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1999. "Investor Protection and Corporate Valuation," Harvard Institute of Economic Research Working Papers 1882, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-deSilanes & Andrei Shleifer & Robert W. Vishny, 1999. "Investor Protection and Corporate Valuation," NBER Working Papers 7403, National Bureau of Economic Research, Inc.
- Kent Daniel & Sheridan Titman, 2006.
"Market Reactions to Tangible and Intangible Information,"
Journal of Finance,
American Finance Association, vol. 61(4), pages 1605-1643, August.
- Kent Daniel & Sheridan Titman, 2003. "Market Reactions to Tangible and Intangible Information," NBER Working Papers 9743, National Bureau of Economic Research, Inc.
- Lev, Baruch & Sougiannis, Theodore, 1996. "The capitalization, amortization, and value-relevance of R&D," Journal of Accounting and Economics, Elsevier, vol. 21(1), pages 107-138, February.
- Fama, Eugene F & MacBeth, James D, 1973. "Risk, Return, and Equilibrium: Empirical Tests," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 607-636, May-June.
- Bronwyn H. HALL & Raffaele ORIANI, 2004. "Does the Market Value R&D Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France," Economics Working Papers ECO2004/13, European University Institute.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40012. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.