Seminar (Dept. of Finance)

Title: R&D, Innovation, and the Stock Market

Speaker: Amit Goyal, Professor, University of Lausanne and Swiss Finance Institute, Switzerland

Time: 15:00-16:30, Sept 22, 2023(Friday)

Venue: Online Meeting

Language: English

ABSTRACT:

We investigate the relation between inventive input (R&D), inventive output (the economic value of patents, EVP), firm-level profitability and asset growth, and stock returns. Current R&D and EVP forecast future profitability. Neither forecast future asset growth. Factor models motivated by q-theory and the dividend discount model fail to price R&D and EVP correctly, leaving large alphas on the table. But model failure is due to design specifics, not economic underpinnings: using cash-based operating profitability to measure expected profitability resurrects both models. The stock market does not appear to misprice inventive input or output.

SHORT BIOGRAPHY:

Amit Goyal is a full professor (tenure-track) in the department of finance at University of Lausanne and Swiss Finance Institute. He obtained his Ph.D.in Finance from Anderson School at University of California, Los Angeles. His research interests lie in empirical asset pricing and investment. His work has been published in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Management Science and Journal of Financial and Quantitative Analysis. He also has served as Co-editors or Associate editors of international finance journals such as Review of Finance and Journal of Financial Markets.