The Relationship Between the Innovation Investment and Stock Market Performance in GEM Firms
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| Title | The Relationship Between the Innovation Investment and Stock Market Performance in GEM Firms
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| Author | Zhou Mingshan,Zhang Qianqian and Yang Dan |
| Organization | School of Finance, Southwestern University of Finance and Economics; School of Business Administration, Southwestern University of Finance and Economics |
| Email | zhoumingshan@swufe.edu.cn：lemonqq90@sina.com；Yangd@swufe.edu.cn |
| Key Words | Innovation Investment; Crash Risk; Abnormal Return; Investors Attention；Management Sales |
| Abstract | Using a sample of listed firms in GEM for the period 2009-2014，this paper studies the relationship between the innovation investment and stock market performance,and the management behavior. We find that:（1）Increased innovation investment in GEM firms is associated with lower stock price crash risk and higher abnormal return.（2）“Investors attention” is the main mechanism,by comparing the two possible mechanisms:“information disclosure improvement” and “performance improvement” VS “investors attention”.（3）Enterprise management can recognize this phenomenon and opportunistically adjust R&D investment to help they reduce their share.（4）The link between R&D investment and stock market performance is more pronounced for firms with high level of capital innovation investment or when the stock market is a “bull market”. Results show that the favor of investors to innovation in GEM lead to that increased innovation investment is followed by lower stock price crash risk and higher abnormal return, which is beneficial to encourage enterprises to innovate. However myopia managers make use of firm innovation investment，in part，to attract investors attention，influence stock price and take the opportunity to sell shares. |
| Serial Number | WP997 |
| Time | 2015-12-22 |
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