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Organization capital effect in stock returns—The role of R&D

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Listed:
  • Konan Chan
  • Mei‐Xuan Li
  • Chu‐Bin Lin
  • Yanzhi Wang

Abstract

Previous studies document a strong organization capital effect in stock returns. We investigate whether and how research and development (R&D) activities affect this organization capital effect. We find that the organization capital effect is stronger in firms with R&D activities. The annual abnormal return of the hedge portfolio sorted by organization capital is 2.41% for R&D firms but only 0.41% for non‐R&D firms. Further analyses show that the organization capital effect can be attributed to R&D characteristics rather than R&D risk factors.

Suggested Citation

  • Konan Chan & Mei‐Xuan Li & Chu‐Bin Lin & Yanzhi Wang, 2022. "Organization capital effect in stock returns—The role of R&D," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(7-8), pages 1237-1263, July.
    • Handle: RePEc:bla:jbfnac:v:49:y:2022:i:7-8:p:1237-1263
    DOI: 10.1111/jbfa.12590
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