Measurement and determinants of innovation efficiency and its impact on asset prices – empirical evidence from listed companies in China

Document Type

Article

Publication Date

1-1-2023

Abstract

This study adopts a dynamic slack-based DEA framework to estimate the innovation efficiency of the exchange-listed companies that are at the centre of China’s innovation network. On average, these companies have low efficiency scores, signalling an over-investment in fixed assets, R&D, and excessive subsidies received from the government, along with a shortage of patent output. A Tobit-based analysis indicates that market share of sales, overvaluation, and profitability are positively linked to innovation efficiency, while excess analyst coverage can impede corporate innovation. Moreover, innovation efficiency is positively associated with stock returns from both cross-sectional regression tests and portfolio strategies.

Publication Title

International Journal of Applied Decision Sciences

First Page Number

210

Last Page Number

236

DOI

10.1504/IJADS.2023.129480

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