Influence of managerial decisions to invest in innovations on the stock market performance

Influence of managerial decisions to invest in innovations on the stock market performance

by Prof. Dr. Martin Užík (BIFID e.V. & Berlin School of Economics and Law),

Doc. Ing. Jozef Glova, PhD. (Technical University of Košice)

and Dr. Tim Langenstein (eBootis AG)

Abstract:

This paper examines the hypothesis that management decisions to invest in innovations have an impact on business performance. We used the “Delta Intangible Assets to Sales Ratio” as a proxy variable for investments in innovations. With regard to the research results, it was shown that the “Delta Intangible Assets to Sales Ratio” can easily explain the company’s performance in 24 months and highly significantly in 36 months. However, the quality of the explanation (R squared) assumes very low values. As investment volume in innovation increases, company management can increase the stock market performance. However, it is reasonable to note that management should consider the timing of the investment and the impact on performance. Thus, investing in innovation is strategic management decision.

Key words:

Valuation, EURO STOXX600

Source:

Influence of managerial decisions to invest in innovations on the stock market performance: an empirical analysis, Polish Journal of Management Studies Vol. 18, 2018

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