Work

RQ Innovative Efficiency and Firm Value

Year: 2021

Type: article

Abstract: We introduce and test a firm-level innovation-efficiency measure new to the finance literature. The measure, termed the research quotient (RQ), defined as the firm-specific output elasticity of research and development (R&D), was first developed in the management literature. RQ has a low correlation with existing innovation input, output, and efficiency measures. We test RQ in a number of innovation tests common to the finance literature and find that RQ is robust in all tests of firm value, even after controlling for previous innovation measures. The results suggest that RQ may serve as a relevant complementary measure of a company’s innovation.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s0022109021000417

Authors: Michael Cooper, Anne Marie Knott, Wenhao Yang

Institutions: University of Utah, Washington University in St. Louis, Chinese University of Hong Kong, Chinese University of Hong Kong, Shenzhen

Language: English

Topic: Firm Innovation and Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2944891806

FWCI: 5.919

Cites: 67

Cited by: 71

Related to: 10