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Market structure and the value of growth

Author

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  • Keith W. Chauvin

    (School of Business, University of Kansas, Lawrence, KS, USA)

  • Mark Hirschey

    (School of Business, University of Kansas, Lawrence, KS, USA)

Abstract

In line with theory suggested by Miller and Modigliani (1961), this paper finds generally positive and statistically significant effects of growth on the current market value of the firm over the 1974-90 period. This intuitive result is not surprising, but the lack of a simple link between the valuation effects of growth and market structure considerations is noteworthy. Importantly, the value of future growth options appears to be closely tied to the firm's ongoing investment in advertising and R&D intangible capital. On the other hand, high current market share does not appear to offer any clear advantage in terms of a firm's ability to expand upon current success. © 1997 John Wiley & Sons, Ltd.

Suggested Citation

  • Keith W. Chauvin & Mark Hirschey, 1997. "Market structure and the value of growth," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 247-254.
    • Handle: RePEc:wly:mgtdec:v:18:y:1997:i:3:p:247-254
    DOI: 10.1002/(SICI)1099-1468(199705)18:3<247::AID-MDE809>3.0.CO;2-Y
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    Cited by:

    1. William Griffiths & Elizabeth Webster, 2004. "The determinants of research and development and intellectual property usage among Australian Companies, 1989 to 2002," Centre for International Economic Studies Working Papers 2004-15, University of Adelaide, Centre for International Economic Studies.
    2. Bronwyn H. Hall, 2006. "R&D, productivity and market value," IFS Working Papers W06/23, Institute for Fiscal Studies.
    3. Mukti Khaire, 2010. "Young and No Money? Never Mind: The Material Impact of Social Resources on New Venture Growth," Organization Science, INFORMS, vol. 21(1), pages 168-185, February.
    4. Hirschey, Mark & Skiba, Hilla & Wintoki, M. Babajide, 2012. "The size, concentration and evolution of corporate R&D spending in U.S. firms from 1976 to 2010: Evidence and implications," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 496-518.
    5. Köylüoğlu, A. Selçuk & Tosun, Petek & Doğan, Mesut, 2021. "The Impact of Marketing on The Business Performance of Companies: A Literature Review [Pazarlamanın Şirketlerin İş Performansı Üzerindeki Etkisi: Bir Literatür Taraması]," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(1), pages 63-74.

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