Published:
Cambridge, Mass: National Bureau of Economic Research, May 2017
Published in:NBER working paper series ; no. w23432
Extent:
1 Online-Ressource
Language:
English
DOI:
10.3386/w23432
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
Mode of access: World Wide Web
System requirements: Adobe [Acrobat] Reader required for PDF files
Description:
We propose that innovative originality (InnOrig) is a valuable organizational resource, and that owing to limited investor attention and skepticism of complexity, firms with greater InnOrig are undervalued. We find that firms' InnOrig strongly predicts higher, more persistent, and less volatile profitability; and higher abnormal stock returns--findings that are robust to extensive controls. The return predictive power of InnOrig is stronger for firms with higher valuation uncertainty, lower investor attention, and greater sensitivity of future profitability to InnOrig. This evidence suggests that innovative originality acts as a 'competitive moat,' and that the market undervalues InnOrig