Influence of Innovations on the level of the risk of the Technology Companies in the US

Student: Safin Aydar

Educational Programme: Economics (Bachelor)

Final Grade: 8

Year of Graduation: 2016

In this paper, we investigate the existence of connection between the level of innovation activities of companies and the level of risk. The analysis was based on the sample of US companies from the technology sector in the period from 2000 to 2015. R&D expenses to Net Sales was taken as an indicator of innovation activity of the companies. Risk of default of the company based on Merton’s model, which was improved by Vassalou and Xing, was the indicator of risk of the company. The analysis of the models was made by running panel regression with fixed effects. Its validity was proved by Hausman’s test. As a result, innovation activities negatively affect the probability of default of technology companies.

Full text (added May 10, 2016)

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