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Firms’ knowledge investment and market responses

Author

Listed:
  • Kyriakos Drivas

    (University of Piraeus)

  • Claire Economidou

    (University of Piraeus)

  • Elena Ketteni

    (Frederick University)

  • Konstantina Kottaridi

    (University of Piraeus
    Hellenic Open University)

Abstract

This paper offers novel insights of market responses to firms’ decisions to invest in knowledge capital. Based on nonparametric techniques, we find evidence of nonlinearities and regime switches. Investment in innovation inputs increases the market value of a firm; however, an extra dollar spent on R&D does not always reflect higher market value. Threshold effects are more apparent when it comes to patents, implying that markets develop a critical stance in valuing innovation output and its quality.

Suggested Citation

  • Kyriakos Drivas & Claire Economidou & Elena Ketteni & Konstantina Kottaridi, 2021. "Firms’ knowledge investment and market responses," Empirical Economics, Springer, vol. 61(5), pages 2363-2394, November.
    • Handle: RePEc:spr:empeco:v:61:y:2021:i:5:d:10.1007_s00181-020-01957-6
    DOI: 10.1007/s00181-020-01957-6
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    More about this item

    Keywords

    Market value; Innovation; R&D; Patents; Marginal integration; Semi-parametric PLR model;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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