Market Value of Construction Innovations: Empirical Evidence from the EU
Heikkilä, Samu (2021)
2021
Rakennustekniikan DI-ohjelma - Master's Programme in Civil Engineering
Rakennetun ympäristön tiedekunta - Faculty of Built Environment
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Hyväksymispäivämäärä
2021-04-26
Julkaisun pysyvä osoite on
http://urn.fi/URN:NBN:fi:tuni-202104193141
http://urn.fi/URN:NBN:fi:tuni-202104193141
Tiivistelmä
The purpose of this study is to examine the connection between innovations and the market capitalization of construction companies. This connection has been a largely unexplored topic in prior literature. The examination is conducted with an event study methodology utilizing innovation announcements as a proxy for innovation. According to earlier literature, innovation announcements contain valuable information to investors. Therefore, observing the change in company´s market capitalization after an innovation announcement should be an accurate way of assessing economic implications of innovation.
This study focuses on large publicly traded construction companies based in the EU. Hence, the empirical analysis of this study utilizes innovation announcement and stock market data specific to these companies. The innovation announcement data is sourced from the official press releases published by the analysed companies in the ten-year period from 2010 to 2019. Utilizing this data sample, an event study is conducted examining the abnormal returns to these innovation announcements. The obtained results are then validated by examining their statistical significance and robustness.
The main finding of this study is that innovation announcements and the market values of companies in the construction industry are positively associated. The obtained results suggest that innovation announcements lead to an average increase of 0.47% in the market capitalization of the examined companies. The increase can be observed on the day of the announcement, and given the rationality in the marketplace, it should reflect the economic impact attributable to innovation. These findings are in line with previous literature suggesting that innovations are a source of economic value.
This study focuses on large publicly traded construction companies based in the EU. Hence, the empirical analysis of this study utilizes innovation announcement and stock market data specific to these companies. The innovation announcement data is sourced from the official press releases published by the analysed companies in the ten-year period from 2010 to 2019. Utilizing this data sample, an event study is conducted examining the abnormal returns to these innovation announcements. The obtained results are then validated by examining their statistical significance and robustness.
The main finding of this study is that innovation announcements and the market values of companies in the construction industry are positively associated. The obtained results suggest that innovation announcements lead to an average increase of 0.47% in the market capitalization of the examined companies. The increase can be observed on the day of the announcement, and given the rationality in the marketplace, it should reflect the economic impact attributable to innovation. These findings are in line with previous literature suggesting that innovations are a source of economic value.