Do Mature Firms Gain Higher Economic Value from R&amp;D Investment?

Opoku‐Mensah, Evans; Yin, Yuming; Addai, Bismark

doi:10.1007/s10842-020-00352-2

Cited by 7 publications

(3 citation statements)

References 35 publications

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“…They stated that R&D expenditure is a crucial risk factor in determining equity returns. Other studies and statistical analyses of R&D spending in similar cases in other emerging economies, such as Turkey (BaŞgoze & Sayin, 2013), China (Lu, 2020;Opoku-Mensah, Yin, & Addai, 2021;Su et al, 2021), India (Majumdar, 2011;Sinha, Mishra, & Patel, 2019;Sharma & Srikanth 2021), and Pakistan (Ghaffar & Khan, 2014), have found an essential linked between R&D expenditure, firm value, and stock returns. Furthermore, the majority of previous studies on R&D return premium at the firm-and industry-level primarily focussed on high R&D economies such as the United States (Callimaci & Landry, 2004;Ehie & Olibe, 2010;Moncada-Paternò-Castello et al, 2010;Dongmei, 2011;Yu et al, 2020), South Korea (Kim & Park, 2020), Brazil (Silva, Klotzle, Pinto, & da Motta, 2018), China (Lu, 2020;Xu, Geng, Wei, & Jiang, 2020;Su et al, 2021), Israel, Finland and Korea (Yury, Albert, & Ilia, 2017).…”

Section: Randd Investment and Firm Factor Characteristicsmentioning

confidence: 95%

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Sharma

Pyati²

2022

jmk

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The economic advantages of research and development (R&D) investment have shown conflicting results in empirical studies. This study aimed to examine a different approach, evaluating R&D premium and cross-sectional variability of equity returns, a particular case for the Indian healthcare industry. The primary motivation for this study arrived from the size of the healthcare industry, the world's third-largest and India's largest industry, and the investment made in R&D activities. Results demonstrated that India's annualized R&D premium was significantly greater than the current value, investment, profitability, and momentum premiums. It indicated that the new R&D risk factor in pricing models is a primary reference for Indian equity investors, particularly for companies with R&D spending. Results were robust in evaluating portfolio return using univariate and multivariate tests. Findings suggested that R&D augmented models outperformed conventional pricing models, denoting that the R&D factor undoubtedly revealed priced element and vital risk factor in designing pricing models for emerging countries like India. When adjusting to R&D investment and trading strategies, policymakers, and financial professionals should hereby evaluate their risk-return implications

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Section: Randd Investment and Firm Factor Characteristicsmentioning

confidence: 95%

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Sharma

Pyati²

2022

jmk

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“…Fundamental in this are the combination of goals and motivations of public action and RFOs. The scientists [48] examined the relationship between R&D investments and firms' economic value.…”

Section: General Literature Review Of the Research Problemmentioning

confidence: 99%

Holistic Approach to R&D Products’ Evaluation for Commercialization under Open Innovations

Chukhray

Mrykhina

Izonin

2022

Journal of Open Innovation: Technology, Market, and Complexity

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A holistic approach to R&D products’ evaluation for commercialization under open innovations is developed. The approach is tested on the example of the device of the interferometric determination of the refractive index of crystalline materials in the optical range. The proposed approach will allow setting a price that will satisfy all the parties of a transfer agreement with a higher level of accuracy and will meet market requirements. Unlike popular methods of evaluating the R&D product, a holistic approach will, on the one hand, be based on the actual costs and the break-even level of a R&D product and, on the other hand, will determine how much the consumer is receptive to a R&D product, and, then again, will show how the added value of the product will develop under the influence of market effects. It is noted that the application of a holistic approach to R&D products’ evaluation for commercialization should be supplemented by assessing the willingness of potential customers to purchase this R&D product at a specific price. It is proved that the proposed holistic approach to R&D products’ evaluation for commercialization is multifunctional. The approach can be applied to different types of economic activity, R&D products, and types of markets. The obtained prices based on the application of a holistic approach to R&D products’ evaluation for commercialization and the results of marketing research of the interferometry market testified to potential prospects of the commercialization of a R&D product of the interferometric determination of the refractive index of crystalline materials in the optical range and its long-term competitiveness. Based on the results, the key provisions of the concept of providing competitive benefits for the period of implementation of the analyzed R&D product are identified. Taking into account fundamental elements of the open innovation paradigm underpins the authors’ holistic approach.

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“…In addition to governments' gatekeeping function, political managers of the economy often utilize tools such as loan guarantees; tax relieves and agencies to play a catalytic role to salvage production activities and boost economic activities whenever there are economic shocks (Hoshi and Kashyap, 2010; Wang and Gao, 2014; Opoku-Mensah et al , 2020). While previous studies have focused on governments' role in innovation and internalization activities (Yang and Stoltenberg, 2014; Panibratov, 2016; Panibratov and Michailova, 2019; Liu et al , 2020), less is known about how governments contribute to M&A success. Understanding governments' role in the acquisition process is a step to identifying the mechanisms by which governments can boost firms' investment activities.…”

Section: Introductionmentioning

confidence: 99%

Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

Opoku‐Mensah

Yin

Asiedu-Ayeh

et al. 2021

IJOEM

Self Cite

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PurposeExisting studies have found that most merger and acquisition (M&A) activities do not create the intended synergy. These studies have mainly investigated how firms' internal factors contribute to M&A successes or failures. The current study differs from the earlier ones by exploring how governments' activities can contribute to the creation of acquisition synergy.Design/methodology/approachA novel technique based on multi-objective optimization by ratio analysis and complex proportional assessment method under an interval-valued intuitionistic fuzzy (IVIF) environment is proposed to prioritize these government roles needed during the M&A process focusing on the Chinese M&A market.FindingsEnactments of regulations and loan guarantees are the most important strategies to help Chinese acquirers overcome acquisition failures. While tax relief ranks third, government training support ranks fourth. Finally, the result shows that government institutional support is the least to help acquirers overcome acquisition failures.Practical implicationsThe government has a role to play in the acquisition success. Although this study has prioritized governments' role in relative importance order, the authors recommend that governments capable of providing all these strategies should do so without any specific order. However, if otherwise, governments should not neglect the strategies with less weight completely but rather consider reducing capital allocations to such strategies. Moreover, this study shows how firms with stronger business ties with government officials may enjoy success during acquisition activities. The authors recommend that firms intending to make acquisitions develop stronger ties with governments in order to benefits from governments.Originality/valueThis is the first study to develop a theoretical framework showing how government can contribute to M&A success. The study achieves this by extending Keynesian's arguments and identifies five (5) ways in which governments can ensure acquisition success. Second, within fuzzy multi-criteria decision-making (F-MCDM) research, this study is the first to show the applicability of integrated multi-objective optimization by ratio analysis (MULTIMOORA) and complex proportional assessment (COPRAS) techniques in an IVIF environment. The novel methodology proposed in this study offers an insightful research method to future studies focusing on group decision problems.

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Do Mature Firms Gain Higher Economic Value from R&D Investment?

Cited by 7 publications

References 35 publications

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Holistic Approach to R&D Products’ Evaluation for Commercialization under Open Innovations

Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

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