R&D investments and high-tech firms' stock return volatility

• Autores: Sami Gharbi, Jean-Michel Sahut, Frédéric Teulon
• Localización: Technological Forecasting and Social Change, ISSN-e 1873-5509, Vol. 88, Nº. 1, 2014, págs. 306-312
• Idioma: inglés
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• Resumen

  • The empirical evidence suggests that firms in high-tech industries exhibit high stock return volatility. In this paper, we conceive of the R&D investment intensity as a possible explanation for the stock volatility behavior in these industries. We suggest that R&D activities generate information asymmetry about the prospects of the firm and make its stock riskier. Relying on Panel data models, we investigate this relationship for French high-tech firms. We find out a strong positive relationship between stock return volatility and R&D investment intensity. This finding suggests that R&D intensive firms should implement an efficient information disclosure policy to reduce information asymmetry and to avoid excessive stock return volatility.