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Innovative Originality, Profitability, and Stock Returns / David Hirshleifer, Po-Hsuan Hsu, Dongmei Li.
- Format:
- Book
- Author/Creator:
- Hirshleifer, David.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w23432.
- NBER working paper series no. w23432
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2017.
- Summary:
- We propose that innovative originality (InnOrig) is a valuable organizational resource, and that owing to limited investor attention and skepticism of complexity, firms with greater InnOrig are undervalued. We find that firms' InnOrig strongly predicts higher, more persistent, and less volatile profitability; and higher abnormal stock returns--findings that are robust to extensive controls. The return predictive power of InnOrig is stronger for firms with higher valuation uncertainty, lower investor attention, and greater sensitivity of future profitability to InnOrig. This evidence suggests that innovative originality acts as a 'competitive moat,' and that the market undervalues InnOrig.
- Notes:
- Print version record
- May 2017.
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