R&D innovation and the value of cash in the biotech industry

Bixia Xu

Journal of Business Research, 2009, vol. 62, issue 7, 750-755

Abstract: This study investigates how the market pricing of an additional dollar of cash held by biotech firms is conditional upon the industry's typical performance, R&D innovation. Under the proposed R&D innovation regime, I find i) an additional dollar of cash is priced higher if held by a firm with higher R&D innovation; ii) the role of R&D innovation is asymmetric depending on whether R&D activities move the drug discovery and development forward or backward; and iii) R&D innovation also differentiates the association between investment opportunities and value of cash observed by prior studies.

Keywords: Cash; reserves; R&; D; innovation; Market; pricing; of; cash; reserves; Investment; opportunities (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:62:y:2009:i:7:p:750-755

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