R&D Investments and Idiosyncratic Volatility
Journal: Journal of Economics and Business (Vol.3, No. 3)Publication Date: 2020-09-30
Authors : Tanvir Hamim;
Page : 1105-1113
Keywords : R&D; Idiosyncratic Volatility; Firm Size; Information Asymmetry;
Abstract
This paper investigates how R&D investment intensity can infuse information asymmetry about the growth prospects and the idiosyncratic volatility of non-financial firms. Panel Data Method has been employed in order to regress idiosyncratic volatility on R&D investments. Using a sample of research-intensive FTSE-100 and S&P-100 firms having the highest market capitalization between 2008 and 2017, the study finds the evidence of a positive association in between R&D investment intensity and idiosyncratic component of total stock return volatility. The study provides the insight that R&D-led firms should leverage on their R&D related sensitive information to reduce the level of idiosyncratic volatility.
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Last modified: 2020-08-18 19:06:46