Presentation Slides for 'Innovative Originality, Profitability, and Stock Returns'

32 Pages Posted: 15 Jun 2018

See all articles by David A. Hirshleifer

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business; NBER

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Dongmei Li

University of South Carolina - Darla Moore School of Business - Department of Finance

Date Written: June 5, 2018

Abstract

These are the slides for the paper “Innovative Originality, Profitability, And Stock Returns.” The abstract of this paper is the following: We propose that innovative originality is a valuable organizational resource and that owing to limited investor attention and skepticism of complexity, greater innovative originality may be undervalued. We find that firms’ innovative originality 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 innovative originality is stronger for firms with higher valuation uncertainty, lower investor attention, and greater sensitivity of future profitability to innovative originality. This evidence suggests that innovative originality acts as a “competitive moat” and is undervalued by the market.

Link to the paper: https://ssrn.com/abstract=2117516

Keywords: Limited attention, Market efficiency, Processing fluency, Innovative originality, Complexity, Ambiguity aversion

JEL Classification: G11, G12, G14, O32

Suggested Citation

Hirshleifer, David A. and Hsu, Po-Hsuan and Li, Dongmei, Presentation Slides for 'Innovative Originality, Profitability, and Stock Returns' (June 5, 2018). Review of Financial Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3191097

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States

HOME PAGE: http://sites.uci.edu/dhirshle/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Dongmei Li (Contact Author)

University of South Carolina - Darla Moore School of Business - Department of Finance ( email )

1014 Greene Street
Columbia, SC 29208
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
119
Abstract Views
436
rank
234,759
PlumX Metrics