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Nicholas, Tom. 2008. "Does Innovation Cause Stock Market Runups? Evidence from the Great Crash."
,
98(4): 1370-96.
Show Article Details
DOI: 10.1257/aer.98.4.1370
Abstract:This article examines the stock market's changing valuation of corporate
patentable assets between 1910 and 1939. It shows that the value of knowledge
capital increased significantly during the 1920s compared to the 1910s
as investors responded to the quality of technological inventions. Innovation
was an important driver of the late 1920s stock market runup, and the Great
Crash did not reflect a significant revaluation of knowledge capital relative
to physical capital. Although substantial quantities of influential patents were
accumulated during the post-crash recovery, high technology firms did not
earn significant excess returns over low technology firms for most of the 1930s.
(JEL G14, N12, N22, O30)
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Authors:
Nicholas, Tom (Harvard U)
JEL Classifications:
G14: Information and Market Efficiency; Event Studies
N12: Economic History: Macroeconomics; Growth and Fluctuations: U.S.; Canada: 1913-
N22: Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
O30: Technological Change; Research and Development: General
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