Corporate R&amp;D spending, subsidies and stock market reactions to seasoned equity offering announcements: evidence from China

Xiang, Xin

doi:10.1108/ijoem-06-2021-0916

Cited by 4 publications

(5 citation statements)

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“…Chang et al (2022) examine the effects of internationalization on R&D performance in the Taiwanese economy, and they find that there is a positive and significant effect of internationalization on R&D performance in an emerging market. Xiang (2022) examines the stock market based on R&D expenditures in the Chinese economy. Xiang (2022) also examined the effects of seasonal equity offerings on R&D investment in the Chinese economy.…”

Section: Introductionmentioning

confidence: 99%

“…Xiang (2022) finds that firms with high R&D spending suffer stock overpricing and experience a negative market reaction when they announce seasonal equity offerings in the Chinese economy. In addition, Xiang (2022) finds that R&D subsidies also reduce stock overpricing and the negative relationship between R&D and seasonal equity offerings based on market reactions in the Chinese economy. Chu and Oldford (2022) examine the mediator role of corporate governance for the relationship between R&D investment inefficiency in the Chinese economy.…”

Section: Introductionmentioning

confidence: 99%

“…Xiang (2022) examines the stock market based on R&D expenditures in the Chinese economy. Xiang (2022) also examined the effects of seasonal equity offerings on R&D investment in the Chinese economy. Xiang (2022) finds that firms with high R&D spending suffer stock overpricing and experience a negative market reaction when they announce seasonal equity offerings in the Chinese economy.…”

Section: Introductionmentioning

confidence: 99%

“…Xiang (2022) also examined the effects of seasonal equity offerings on R&D investment in the Chinese economy. Xiang (2022) finds that firms with high R&D spending suffer stock overpricing and experience a negative market reaction when they announce seasonal equity offerings in the Chinese economy. In addition, Xiang (2022) finds that R&D subsidies also reduce stock overpricing and the negative relationship between R&D and seasonal equity offerings based on market reactions in the Chinese economy.…”

Section: Introductionmentioning

confidence: 99%

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The crowding-out effect of shareholder value-based CEO compensation on R&D investment in the European context: a new interpretation

Doruk

2022

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PurposeIn the present study, using a novel fractional logit model, the link between R&D (Research & Development) investment and shareholder value-based CEO (Chief Executive Officer) compensation has been examined within the non-financial sector in the Euro area economies using a firm-level dataset for 2002–2019.Design/methodology/approachThe fractional logit model is utilized to examine the effects of corporate payment on R&D investment. The fractional logit model can be considered the empirical approach that takes into account R&D non-performer firms to avoid reducing the sample size. The fractional logit model is superior to the censored or truncated models, like Tobit, since the fractional logit model is useful to address the econometric limitations that are found in the censored and truncated models in the non-linear models.FindingsThe findings obtained in this study showed a significant and negative effect of short-term aim-based CEO payment on R&D expenditures in the Euro area economies using firm-level data. These findings are robust to different robustness checks and modeling alternatives.Originality/valueTo the author's knowledge, there is no study that examines the effects of short-term shareholder value maximization-based CEO compensation on R&D in the European context in the literature.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The crowding-out effect of shareholder value-based CEO compensation on R&D investment in the European context: a new interpretation

Doruk

2022

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“…Perhaps as a result, Botta and Colombo (2019) find that both shareholders and bondholders experience negative returns following SEOs. From the perspective of a firm's earnings and expenditure management, Xiang (2022) argues that the firms with high R&D spending experience stock overpricing and negative market reaction when they announce SEOs. Prior research has also used several explanatory variables-for example, past growth rate of firms (Purnanandam and Swaminathan 2006), or externalities such as hedge fund variables (Hull et al 2018).…”

Section: Introductionmentioning

confidence: 99%

The Methodology Matters: What Influences Market Reaction, and Post-Issue Returns in Seasoned Equity Offerings?

Krishnan

2022

JRFM

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Using a large database of U.S. seasoned equity offering (SEO) announcements from 2010 to 2015, we examine the effects of several explanatory variables—firm specific, macroeconomic, fixed income, and stock market variables—on the announcement period abnormal stock returns and on the longer-run post-issue abnormal returns. We use five different statistical methods—multivariate linear regression, regression on a reduced model using principal components analysis, year-by-year regression on a reduced model using principal components analysis, random forest regression on the whole sample, and year-by-year random forest regression. In general, across the methods, we find that firm’s profitability in the recent past is an important explanatory factor in both short-term and long-term abnormal stock returns, but several other significant explanatory factors change based on the statistical method used. Therefore, the statistical method used affects the results reported.

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When R&D investment improves firm value: the role of board gender diversity

Kyaw,

Khatri,

Treepongkaruna

2024

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Purpose Agency theory postulates that research and development (R&D) investments are subject to managerial discretion and thus may not enhance firm value as expected. The inconclusive empirical findings in the literature is a testament of that. This paper aims to investigate the interplay between board gender diversity (i.e. women on boards) and value relevance of firms’ effort to innovate as indicated by firms’ R&D investments. Design/methodology/approach Through a sample of 1,626 US-listed firms from the period 2004 to 2019, the authors examine whether board gender diversity promotes or hampers value relevance of firms’ efforts to innovate. The authors use ordinary least squares as the baseline model and address potential endogeneity through instrumental variable two-stage least square, and selection bias through Heckman selection model. Finally, the authors use the financial crisis of 2008 as a natural experiment to investigate the effect of board gender diversity during the crisis period. Findings The results show that board gender diversity positively moderates the relation between R&D and firm value. In times of financial crisis, R&D does not destroy firm value in firms with gender diverse board. The results are robust to measurement error, endogeneity issue, particularly simultaneity and selection bias. Practical implications The findings in this study have several practical implications. Firms that invest heavily in R&D should be mindful of gender diversity in their board recruitment strategies to enhance innovation outputs and firm value. Current and potential investors (i.e. shareholders) should take into consideration board gender diversity in their investment decision-making processes as the results show that gender diverse boards promote more effective governance, which, in turn, leads to better alignment of R&D investments with shareholder value. Regulators aiming to improve corporate governance policies should encourage gender diversity on the boards. The results align with global initiatives such as the United Nations Sustainable Development Goals, particularly Goal 5 on gender equality. Policymakers may use the findings in this study to advocate for more gender diverse governance structures within corporations. Originality/value This study investigates the role gender diverse boards play in creating value from firms’ R&D activities.

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Corporate R&D spending, subsidies and stock market reactions to seasoned equity offering announcements: evidence from China

Cited by 4 publications

References 60 publications

The crowding-out effect of shareholder value-based CEO compensation on R&D investment in the European context: a new interpretation

The crowding-out effect of shareholder value-based CEO compensation on R&D investment in the European context: a new interpretation

The Methodology Matters: What Influences Market Reaction, and Post-Issue Returns in Seasoned Equity Offerings?

When R&D investment improves firm value: the role of board gender diversity

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