Joint effect between R&D investments and market competition on stock returns: Evidence from developed European countries
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School of Business |
Bachelor's thesis
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Authors
Date
2019
Department
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
24
Series
Abstract
Firms that invest aggressively in research and development (R&D) are often riskier than other companies since their future earnings are more prone if an adverse situation occurs, and therefore have higher expected returns. Similarly, firms that operate in competitive industries are riskier since they have more rivals, and the likeliness that an R&D project has to be suspended is higher. This implies a strong positive joint effect between industry competition and R&D investment. In this paper, empirical evidence is provided to support the joint effect hypothesis, based on European stock and accounting data.Description
Thesis advisor
Kokkonen, JoniKeywords
Research and development, Competition, Stock returns, Europe