Learning from the Joneses: Technology Spillover, Innovation Externality, and Stock Returns

45 Pages Posted: 13 May 2017 Last revised: 3 Dec 2018

See all articles by Kevin Tseng

Kevin Tseng

University of Kansas School of Business

Date Written: June 8, 2018

Abstract

This paper studies the asset pricing implications of technology spillover, an important externality in innovation. Using patent and R&D data from 1982 to 2013, I find that firms with more technology spillover earn 7.7% higher annualized returns than firms with less technology spillover. The effect is independent of product market competition and is robust when I control for intangible capital. The results support models in which technology spillover enables learning from peers with respect to the technological uncertainty of existing ventures, and also increases innovation capacity for future ventures.

Keywords: technology spillover, externality, learning, innovation capacity, stock returns

JEL Classification: D64, G12, O3

Suggested Citation

Tseng, Kevin, Learning from the Joneses: Technology Spillover, Innovation Externality, and Stock Returns (June 8, 2018). Available at SSRN: https://ssrn.com/abstract=2967101 or http://dx.doi.org/10.2139/ssrn.2967101

Kevin Tseng (Contact Author)

University of Kansas School of Business ( email )

4136 Capital Federal Hall
1654 Naismith Dr
Lawrence, KS 66045
United States
785-864-1683 (Phone)

HOME PAGE: http://business.ku.edu/kevin-tseng

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