Author: Chen, I Ming
Title: Can R&D spillover effect explain the positive association between R&D investments and future abnormal returns ?
Advisors: Jiang, Li (LMS)
Degree: D.B.A.
Year: 2019
Subject: Hong Kong Polytechnic University -- Dissertations
Technological innovations -- Economic aspects
Research, Industrial -- Economic aspects
Department: Faculty of Business
Pages: iv, 96 pages : color illustrations
Language: English
Abstract: This study examines whether R&D spillover effect can provide an alternative explanation on the positive association between R&D investments and future abnormal returns. I find that R&D investments of peer firms positively affect a firm's stock returns, and such R&D spillover effect is inversely related to geographical proximity and is positively related to the firm's own absorptive capability. In particular, using geographic distance as a key determinant of R&D spillover potential, I find no significant effect of such incoming R&D spillover potential on stock returns on its own. However, I find an incremental positive effect of the interaction between incoming R&D spillover potential and a firm's R&D investments as a proxy for absorptive capability. My evidence suggests that a firm's R&D investments enhance its absorptive capability in benefiting from peer firms' R&D investments. My study contributes to the literature on R&D premium by providing a new perspective on the importance of peer firms' R&D investments.
Rights: All rights reserved
Access: restricted access

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