| Summary: | 碩士 === 中原大學 === 國際商學碩士學位學程 === 104 === Innovation is one of the drivers of economic growth of a firm, which can improve market share by producing new products with competitive advantage. Innovation and performance of a firm could be looked from the number of its patent. Patent information enables a firm to estimate R&;D efficiency and stock market value. However, most of the patents grants do not produce future profitable products. Besides, patents as an innovation indicator is not universal, since more than 50% companies in COMPUSTAT do not patent their new products. Since patents have some drawbacks, there is a better way of measuring firm innovation, called Research Quotient (RQ). Using RQ as an indicator of firm innovation is better than other indicator because RQ measures the productivity of the R&;D Department, which produces a new innovative product and transforms it into revenues.
In this paper we examined whether the impact of option trading on the relation between RQ and stock market return (or firm value) is stronger than firm without option trading. Furthermore, we will explore the differences between biotechnology industry, which has higher level of R&;D intensity and other industries that have lower level of R&;D intensity. In this research, we use sample period for 14 years range, from 1996 to 2009.
Our analysis lead to five findings: RQ has a positive impact on firm value, proxy by Market-to-Book Value. Unexpectedly, the option trading lowers the impact of RQ on firm value than without option trading. While in future stock return, option trading instead make the impact of RQ on future stock return higher than that without option trading. The opposite results come from the impact of option volume. Interaction term of RQ and option volume has positive impact on MTB, while its impact on future stock return is negative and insignificant. Contrary to our hypothesis, we found that the relation between RQ and future stock return (or firm value) is lower in biotechnology industry than in other industries.
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