Innovation and Firm Performance: Evidence from Portfolio-Based Asset Pricing and Risk-Adjusted Returns Across Regions

Kolade David Oke (), Radu Burlacu (), Isabelle Girerd-Potin () and Gilles Sanfilippo ()
Additional contact information
Kolade David Oke: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes
Radu Burlacu: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes
Isabelle Girerd-Potin: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA - Université Grenoble Alpes, UGA - Université Grenoble Alpes, Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes

Post-Print from HAL

Abstract: This paper examines whether firm-level patent activity and citation impact predict superior stock performance in U.S. and European markets. Using portfolios sorted by innovation intensity, we find a consistent but non-linear innovation premium that follows an Inverted-U pattern, peaking before the extremely innovative portfolio. While the U.S. acts as an efficiency machine that rewards patent outputs and penalizes unproductive R&D, Europe behaves as a signalling regime where R&D spending serves as a legitimacy signal for mature incumbents. The premium is subject to rapid time decay, with abnormal returns largely dissipating within 24 months after portfolio formation. Statistical tests reject a uniform global innovation factor, revealing that the innovation premium is not a universal constant but is contingent on regional market characteristics.

Keywords: Long-Short Strategies; Portfolio Sorting; Patent-Based Measure; Innovation Intensity (search for similar items in EconPapers)
Date: 2026-06-01
References: Add references at CitEc
Citations:

Published in International Conference of the Association Française de Finance (AFFI), Jun 2026, Clermont - Ferrand, France

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05770346

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().