Technology adoption, external financing frictions, and the cross sectional returns

Xiaoji Lin; Berardino Palazzo

A dynamic model featuring a stochastic technology frontier shows significant impact of technology adoption for asset prices. In equilibrium, firms operating with old capital are riskier because costly technology adoption restricts their flexibilities in upgrading to the latest technology, making them more exposed to technology frontier shocks. Consistent with the model predictions, a long-short portfolio sorted on firm-level capital age earns an average value-weighted return of 9% per year among U.S. public companies. A proxy for technology frontier shocks captures the variation of the capital age portfolios with a positive risk price, corroborating the model mechanism

MoreLess

Year of publication:	2015
Authors:	Lin, Xiaoji ; Palazzo, Berardino
Publisher:	Columbus, Ohio : Charles A. Dice Center for Research in Financial Economics
Subject:	Technology adoption \| technology frontier shock \| capital age \| stock returns \| Kapitaleinkommen \| Capital income \| Theorie \| Theory \| Technischer Fortschritt \| Technological change \| Innovationsdiffusion \| Innovation diffusion \| Technologiewahl \| Technology choice \| Schock \| Shock \| CAPM \| Unternehmensfinanzierung \| Corporate finance \| Portfolio-Management \| Portfolio selection

freely available

Full text |

More access options

doi.org

Check Google Scholar

In German libraries (KVK)

I need help

Which error do you want to report?

Report: URL of this record is broken

Please note: Sometimes more than one URL is available for a resource. Please click on "More Options" to display these URLs

Report: Addition of an URL to that resource

Please note: Sometimes more than one URL is available for a resource. Please click on "More Options" to display these URLs

Report: The language(s) of that resource is/are…

Please note: Required language not in the list? Please use comment field

Report: Addition of an identifier to that resource

Report: report typo

Report: Add statement

Report: Add keywords

Please use the commentary box to describe other errors

Would you like to receive a feedback?

Commentary

Please type the code from the image

For general questions please use this address.

Persistent link: https://www.econbiz.de/10010531879