RQ Innovative Efficiency and Firm Value

Cooper, Michael, Anne Marie Knott and Wenhao Yang, “RQ Innovative Efficiency and Firm Value” forthcoming, Journal of Financial and Quantitative Analysis

81 Pages Posted: 17 Jul 2015 Last revised: 2 Sep 2021

See all articles by Michael J. Cooper

Michael J. Cooper

University of Utah - David Eccles School of Business

Anne Marie Knott

Washington University in St. Louis - John M. Olin Business School

Wenhao Yang

University of North Carolina (UNC) at Charlotte - Finance

Date Written: July 1, 2020

Abstract

We introduce and test a firm-level innovation-efficiency measure new to the finance literature. The measure, RQ, defined as the firm-specific output elasticity of R&D, was first developed in the management literature. RQ has 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.

Keywords: Innovation, Research Quotient, Firm Value, Patents, Citations

JEL Classification: O31, O32, G12, G14

Suggested Citation

Cooper, Michael J. and Knott, Anne Marie and Yang, Wenhao, RQ Innovative Efficiency and Firm Value (July 1, 2020). Cooper, Michael, Anne Marie Knott and Wenhao Yang, “RQ Innovative Efficiency and Firm Value” forthcoming, Journal of Financial and Quantitative Analysis, Available at SSRN: https://ssrn.com/abstract=2631655 or http://dx.doi.org/10.2139/ssrn.2631655

Michael J. Cooper (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Anne Marie Knott

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States

Wenhao Yang

University of North Carolina (UNC) at Charlotte - Finance ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States

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