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Conference Paper: Innovation-Product Connection: R&D 100 Awards, Product Segmentation and Stock Returns
Title | Innovation-Product Connection: R&D 100 Awards, Product Segmentation and Stock Returns |
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Other Titles | What Follows Innovation Awards? R&D 100 Awards, Product Segmentation, and Stock Returns |
Authors | |
Issue Date | 2018 |
Publisher | Financial Management Association. |
Citation | 2018 Financial Management Association Annual Meeting, San Diego, CA, USA, 10-13 October 2018 How to Cite? |
Abstract | This paper connects product market segmentation to asset pricing through a prestigious award for technology breakthroughs in product inventions: the R&D 100 Award. We argue that award-winning events have asset pricing implications because award-winning firms can promote their products to the high-end market, which increases profitability in a procyclical way and results in higher systematic risk. We find that, compared with their matched industry peers, award-winning firms are associated with higher future gross profit margins and net sales. Moreover, award-winning firms outperform their matched industry peers by 3% in annual return. To explain this intriguing pattern, we develop an investment-based model to connect growth opportunities, R&D investments, product awards, and stock returns. The model also suggests that the award-return relation increases with R&D investments and aggregate consumption, which receive empirical support. |
Description | Session 264: Stocks Returns |
Persistent Identifier | http://hdl.handle.net/10722/278813 |
DC Field | Value | Language |
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dc.contributor.author | Hsu, P | - |
dc.contributor.author | Yang, Y | - |
dc.contributor.author | Zhou, T | - |
dc.date.accessioned | 2019-10-21T02:14:30Z | - |
dc.date.available | 2019-10-21T02:14:30Z | - |
dc.date.issued | 2018 | - |
dc.identifier.citation | 2018 Financial Management Association Annual Meeting, San Diego, CA, USA, 10-13 October 2018 | - |
dc.identifier.uri | http://hdl.handle.net/10722/278813 | - |
dc.description | Session 264: Stocks Returns | - |
dc.description.abstract | This paper connects product market segmentation to asset pricing through a prestigious award for technology breakthroughs in product inventions: the R&D 100 Award. We argue that award-winning events have asset pricing implications because award-winning firms can promote their products to the high-end market, which increases profitability in a procyclical way and results in higher systematic risk. We find that, compared with their matched industry peers, award-winning firms are associated with higher future gross profit margins and net sales. Moreover, award-winning firms outperform their matched industry peers by 3% in annual return. To explain this intriguing pattern, we develop an investment-based model to connect growth opportunities, R&D investments, product awards, and stock returns. The model also suggests that the award-return relation increases with R&D investments and aggregate consumption, which receive empirical support. | - |
dc.language | eng | - |
dc.publisher | Financial Management Association. | - |
dc.relation.ispartof | Financial Management Association Annual Meeting, 2018 | - |
dc.title | Innovation-Product Connection: R&D 100 Awards, Product Segmentation and Stock Returns | - |
dc.title.alternative | What Follows Innovation Awards? R&D 100 Awards, Product Segmentation, and Stock Returns | - |
dc.type | Conference_Paper | - |
dc.identifier.email | Hsu, P: paulhsu@hku.hk | - |
dc.identifier.authority | Hsu, P=rp01553 | - |
dc.identifier.hkuros | 307592 | - |
dc.publisher.place | United States | - |