The Effects of Innovation on the Companies’ Stock Values: An Econometric Analysis for Turkey

Abstract

Innovation means innovation. It enables companies to grow and compete with other companies. However, innovation studies also increase the welfare level of the countries. One of the most important topics in innovation studies is research and development (R&D). R&D enables companies to identify their current problems and lay the groundwork for new products and services. In this way, it contributes to the profit of the companies. The purpose of this study is to determine the effect of innovation on the share value of the company. In the study, the data are collected from Turkey during the period 1991–2019. However, the study was tested by Engle–Granger Cointegration analysis. As a result, it has been determined that there is a long-term relationship between R&D expenditures and the company’s share value. In this context, companies need to focus on R&D expenditures to increase their share values. For this issue, they need to increase their liquidity. In addition, the R&D departments in the company need to be increased. Companies need to prepare a separate budget for R&D studies.