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- Title
R&D, knowledge spillovers and stock volatility.
- Authors
Fung, Michael K.
- Abstract
Firms improve their know-how not only by innovations (producing new knowledge), but also by knowledge spillovers (learning from others). The objective of this study is to test for two major hypotheses developed from a theoretical model explaining the relationship between R&D, knowledge spillovers and stock volatility. Analytically, the model suggests that asymmetric information caused by R&D activities with uncertain future output increases stock volatility, even though dividends and consumptions remain unchanged. However, interfirm knowledge spillovers have a negative impact on stock volatility by reducing the degree of asymmetric information. Both hypotheses are supported by empirical evidence from this study.
- Subjects
RESEARCH &; development; MARKET volatility; STOCK prices; ORGANIZATIONAL learning; ECONOMETRIC models; MARKET prices; BUSINESS research; RESEARCH methodology
- Publication
Accounting & Finance, 2006, Vol 46, Issue 1, p107
- ISSN
0810-5391
- Publication type
Article
- DOI
10.1111/j.1467-629X.2006.00166.x