Knowledge Capital and Stock Returns during Crises in the Manufacturing Sector: Moderating Role of Market Share, Tobin’s Q, and Cash Holdings

Chaeho Chase Lee, Erdal Atukeren and Hohyun Kim ()
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Chaeho Chase Lee: BSL Business School Lausanne, Route de la Maladière 21, 1022 Chavannes, Switzerland
Hohyun Kim: School of Management and Economics, Handong Global University, 558, Handong-ro, Heunghae-eup, Buk-gu, Pohang-si 37554, Gyeongsangbuk-do, Republic of Korea

Risks, 2024, vol. 12, issue 6, 1-23

Abstract: This study analyzes the impact of knowledge capital (KC), a key element of firms’ innovation and competitiveness, on stock returns during economic crises when sustainable competitiveness becomes particularly important. We analyze the impact of the Global Financial Crisis and COVID-19 as economic crises, focusing on manufacturing industries with a high proportion of investment shifts from physical capital to KC. Our findings indicate that KC is positively associated with stock returns during the Global Financial Crisis and COVID-19. This positive relationship is strengthened by the firm’s ability to leverage KC, as measured by greater product market share, higher Tobin’s Q, and larger cash holdings. This study emphasizes the protective role of KC during the economic crisis when the market pays more attention to corporate sustainability and provides implications to corporate managers and investors.

Keywords: knowledge capital; economic crisis return; market share; Tobin’s Q; cash holdings (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2024
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