The Market Value of R&D in Weak Innovation Regimes: Evidence from India / Sunil Kanwar, Bronwyn H. Hall.

By:

Kanwar, Sunil

Contributor(s):

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w21196.Publication details: Cambridge, Mass. National Bureau of Economic Research 2015.Description: 1 online resource: illustrations (black and white)Subject(s):

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using data for Indian firms from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than it values such investment in developed economies such as the US and European countries, suggesting some degree of underinvestment. The paper explores the use of a proxy for the option value of R&D and finds that this can account for a very small part of the R&D valuation (about 10 per cent). We also find that the market value-R&D relationship does not vary significantly across industry groups, although these results are rather imprecise.

Tags from this library: No tags from this library for this title. Log in to add tags.

Average rating: 0.0 (0 votes)

Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w21196 (Browse shelf(Opens below))	Not For Loan

Total holds: 0

Collection: Colección NBER Close shelf browser (Hides shelf browser)

Previous	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	Next
Previous	nber w21193 The Indigenous Roots of Representative Democracy /	nber w21194 Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don't Increase Household Driving /	nber w21195 Corporation Law and the Shift toward Open Access in the Antebellum United States /	nber w21196 The Market Value of R&D in Weak Innovation Regimes: Evidence from India /	nber w21197 Soda Taxes and the Prices of Sodas and Other Drinks: Evidence from Mexico /	nber w21198 Culture and Global Sourcing /	nber w21199 Firming Up Inequality /	Next

May 2015.

We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using data for Indian firms from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than it values such investment in developed economies such as the US and European countries, suggesting some degree of underinvestment. The paper explores the use of a proxy for the option value of R&D and finds that this can account for a very small part of the R&D valuation (about 10 per cent). We also find that the market value-R&D relationship does not vary significantly across industry groups, although these results are rather imprecise.