Acceso usuarios
The general positive association between investment opportunities and firm market value has been well-documented by prior cross-industry studies. Differently, this study empirically investigates how the market pricing of investment opportunities is conditional upon the perceived firm ability to actually capitalize these opportunities for a specific industry which is characterized by high uncertainty of investment success. Under the proposed investment success framework, I find a nonlinear association between investment opportunities and firm market value, depending on perceived investment success rate. Rapid R&D progress is associated with high market pricing of investment opportunities. Moreover, the effect of R&D progress is asymmetric, depending on the nature of the progress. Results suggest that R&D progress provides risk-relevant information for investment success assessment.
