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The impact of innovation on the share price performance of digital firms

Vol. 12, Iss. 4, DECEMBER 2019

Received: 15 May 2019

Received in revised form: 7 June 2019

Accepted: 5 July 2019

Available online: 29 November 2019

Subject Heading: INNOVATION AND INVESTMENT

JEL Classification: C11, G17

Pages: 435–449

https://doi.org/10.24891/fa.12.4.435

Rogachev D.Yu. National Research Lobachevsky State University of Nizhny Novgorod (UNN), Nizhny Novgorod, Russian Federation
rogistyle@mail.ru

https://orcid.org/0000-0002-0683-3340

Subject This article deals with the issues of investments of companies in research and development (R&D), that influence the financial condition of organizations considerably.
Objectives The article aims to identify the relationships between the R&D costs and the share value of some U.S. companies and assess the impact of digital differentiation on the effectiveness of the company's investment policy in the field of R&D.
Methods For the study, I used the technique of econometric modeling of share price appreciation (time dependent price behavior), applying mixed models based on heterogeneous panel data.
Results The article presents certain criteria that help differentiate digital companies from the less digital ones. It shows how and what R&D costs of different companies and under what conditions have certain effect on the share price performance of the companies.
Conclusions The proposed models help establish and clarify the relationship between the company's innovation activity, general level of volatility in the stock market, and the level of digital development of the company.

Keywords: stock price, growth, volatility index, R&D expenditure, digital technology use

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