Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/65000
Title: The R&D premium and takeover risk
Authors: Lin, JC 
Wang, YA
Keywords: R&D
Takeover risk
Risk premium
Issue Date: 2016
Publisher: American Accounting Association
Source: Accounting review, 2016, v. 91, no. 3, p. 955-971 How to cite?
Journal: Accounting review 
Abstract: To explain why firms with high research and development (R&D) intensity offer their investors higher stock returns, we argue that (1) high R&D capacity relative to firm valuation makes R&D-intensive firms attractive takeover targets, and that (2) the higher takeover probability leads their investors to face higher takeover risk, as proposed by Cremers, Nair, and John (2009), and require higher returns. We find evidence consistent with our hypothesis. Furthermore, we find that takeover probability also relates to large R&D increases, but not to innovation efficiency. Accordingly, we expect and find that takeover risk helps to explain the premium associated with large R&D increases, but not the innovation efficiency premium previously documented.
URI: http://hdl.handle.net/10397/65000
ISSN: 0001-4826
EISSN: 1558-7967
DOI: 10.2308/accr-51270
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