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dc.contributor.authorCohen, Lauren Harry
dc.contributor.authorDiether, Karl
dc.contributor.authorMalloy, Christopher James
dc.date.accessioned2012-12-07T18:40:35Z
dc.date.issued2012-12-07
dc.identifier.citationCohen, Lauren, Karl Diether, and Christopher Malloy. "Misvaluing Innovation." Review of Financial Studies 26, no. 3 (March 2013): 635–666.en_US
dc.identifier.issn0893-9454en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:10018930
dc.description.abstractWe demonstrate that a firm’s ability to innovate is predictable, persistent, and relatively simple to compute, and yet the stock market ignores the implications of past successes when valuing future innovation. We show that two firms that invest the exact same in research and development (R&D) can have quite divergent, but predictably divergent, future paths. Our approach is based on the simple premise that while future outcomes associated with R&D investment are uncertain, the past track records of firms may give insight into their potential for future success. We show that a long-short portfolio strategy that takes advantage of the information in past track records earns abnormal returns of roughly 11% per year. Importantly, these past track records also predict divergent future real outcomes in patents, patent citations, and new product innovations.en_US
dc.language.isoen_USen_US
dc.relation.hasversionhttp://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2012.01740.x/abstracten_US
dash.licenseOAP
dc.subjectinnovationen_US
dc.subjectreturn predictabilityen_US
dc.subjectr&den_US
dc.titleMisvaluing Innovationen_US
dc.typeJournal Articleen_US
dc.description.versionAuthor's Originalen_US
dc.relation.journalReview of Financial Studiesen_US
dash.depositing.authorCohen, Lauren Harry
dc.date.available2012-12-07T18:40:35Z
dash.contributor.affiliatedMalloy, Christopher
dash.contributor.affiliatedCohen, Lauren


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