Cooperative R&D and the value of the firm

In this paper, we investigate the stock price responses of listed firms in the U.S. markets to announcements of R&D collaborations. We find that abnormal returns of stocks are significantly positive after R&D collaborations are announced. The positive stock price response towards the R&D cooperation initiations can be partially explained by the nature of the collaborations and the characteristics of the participating firms. We also find that the stock prices of rival firms respond negatively to announcements of R&D cooperation. This result seems to support the hypothesis that cooperative R&D improves economic efficiency of the cooperative firms that gain competitive advantage. We do not find evidence supporting the hypothesis that R&D cooperation creates collusive, anticompetitive effects in the product market.