We examine a sample of 8,313 cases, between 1951 and 2001, where firms unexpectedly increase their research and development expenditures (Ramp;D) by a significant amount. We find consistent evidence of a mis-reaction, as manifested in the significantly positive abnormal stock returns that our...

The positive stock price reaction to stock buyback announcements reported in many previous studies is commonly interpreted as a signal that the firm's future profitability will rise, or that the firm is decreasing its agency costs by dispersing free cash flow, or that the firm is increasing its...

We examine a sample of 8,313 cases, between 1951 and 2001, where firms unexpectedly increase their research and development expenditures (Ramp;D) by a significant amount. We find consistent evidence that our sample firms are undervalued following their Ramp;D increases as manifested in the...