Corporate innovation and uncertainty avoidance
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This study investigates how investors assess the innovative endeavors of companies in the capital market. Specifically, I examine how investors evaluate corporate innovative investment depending on the level of uncertainty avoidance. First, the results of this research suggest that the value derived from R&D investments exceeds their related expenses for both high-tech and non-high-tech firms on average. Next, I investigate whether the impact of uncertainty avoidance on the value of R&D investments varies significantly among firms with varying degrees of technology orientation. The evidence from this research indicates that uncertainty avoidance has a detrimental effect on the value of R&D investments made by non-high-tech firms, but has no significant impact on the value of high-tech firms’ R&D investments. When valuing high-tech firms, investors appear to be unaffected by the level of uncertainty avoidance in the firm’s country. The reliability of the main findings is well-supported by extensive robustness analyses.
Abstract
This study investigates how investors assess the innovative endeavors of companies in the capital market. Specifically, I examine how investors evaluate corporate innovative investment depending on the level of uncertainty avoidance. First, the results of this research suggest that the value derived from R&D investments exceeds their related expenses for both high-tech and non-high-tech firms on average. Next, I investigate whether the impact of uncertainty avoidance on the value of R&D investments varies significantly among firms with varying degrees of technology orientation. The evidence from this research indicates that uncertainty avoidance has a detrimental effect on the value of R&D investments made by non-high-tech firms, but has no significant impact on the value of high-tech firms’ R&D investments. When valuing high-tech firms, investors appear to be unaffected by the level of uncertainty avoidance in the firm’s country. The reliability of the main findings is well-supported by extensive robustness analyses.