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Conference Paper: Innovation Awards, Product Segmentation, and Stock Returns
Title | Innovation Awards, Product Segmentation, and Stock Returns |
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Authors | |
Issue Date | 2019 |
Publisher | Financial Management Association International. |
Citation | 2019 Financial Management Association Asia/Pacific Conference, Ho Chi Minh City, Vietnam, 10-17 July 2019 How to Cite? |
Abstract | This paper connects technological innovation to product market segmentation using a prestigious award for technology breakthroughs in product inventions: the R&D 100 Award. We argue that award-winning outcomes have asset pricing implications because awarded firms have the growth opportunities to promote their products to high-end markets, which increases revenue procyclical to aggregate consumption and results in higher systematic risks. We find that, compared with their matched industry counterparts, awarded firms are associated with lower product similarity, lower product fluidity, and higher profitability over the future five years. Moreover, these firms outperform their comparable peers by 3% in annual returns and have both significantly higher procyclicality of sales growth and market betas. Moreover, the award-return relation is more pronounced in periods of higher aggregate consumption growth and among firms with higher R&D investments. |
Description | Session 01: Asset Pricing Models & Tests 1 |
Persistent Identifier | http://hdl.handle.net/10722/279220 |
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 | 2019-10-21T02:21:51Z | - |
dc.date.available | 2019-10-21T02:21:51Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | 2019 Financial Management Association Asia/Pacific Conference, Ho Chi Minh City, Vietnam, 10-17 July 2019 | - |
dc.identifier.uri | http://hdl.handle.net/10722/279220 | - |
dc.description | Session 01: Asset Pricing Models & Tests 1 | - |
dc.description.abstract | This paper connects technological innovation to product market segmentation using a prestigious award for technology breakthroughs in product inventions: the R&D 100 Award. We argue that award-winning outcomes have asset pricing implications because awarded firms have the growth opportunities to promote their products to high-end markets, which increases revenue procyclical to aggregate consumption and results in higher systematic risks. We find that, compared with their matched industry counterparts, awarded firms are associated with lower product similarity, lower product fluidity, and higher profitability over the future five years. Moreover, these firms outperform their comparable peers by 3% in annual returns and have both significantly higher procyclicality of sales growth and market betas. Moreover, the award-return relation is more pronounced in periods of higher aggregate consumption growth and among firms with higher R&D investments. | - |
dc.language | eng | - |
dc.publisher | Financial Management Association International. | - |
dc.relation.ispartof | 2019 Financial Management Association Asia/Pacific Conference | - |
dc.title | Innovation 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 | 307595 | - |