Does the Market Value R&D Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France, Germany, and Italy
Year: 2004
Type: report
Abstract: Several studies based on US and UK data have used market value as an indicator of the firm''s expected R&D performance.However, there exist no investigations for the continental countries in the European Union, partly because the analysis is complicated by data availability problems.In this paper we take a first step towards filling this gap using a newly constructed panel dataset of firms that are publicly traded in France, Germany, and Italy.Controlling for either permanent unobserved firm effects or sample selection due to the voluntary nature of R&D disclosure, we find that the relative shadow value of R&D in France and Germany is remarkably similar both to each other and to that in the US or the UK during the same period In contrast, we find that R&D in publicly traded Italian firms is not valued by financial markets on average.However, when we control for the presence of a single large shareholder, we find that both French and Italian firms have high R&D valuations when no single shareholder holds more than one third of the firm, but that R&D is essentially not valued in the other firms.
DOI: 10.3386/w10408
Authors: Bronwyn Hall, Raffaele Oriani
Language: English
Topic: Firm Innovation and Growth
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funder: Banca d'Italia
OpenAlex ID: W1965649218