Keywords
profitability persistence, technological innovation investment, GMM estimation method, continuous improvement of profits
Abstract
It is a new problem to study the reqular pattern of technological innovation investment driving enterprise profitability persistence and sustainable development. This paper takes profitability persistence as a new index of economic performance, and derives the hypothesis of profitability persistence driven by technological innovation investment. This study builds GMM dynamic auto-regressive model, and selects GEM firms of Shenzhen Stock Exchange as samples and uses GMM estimation method to empirically prove the impact of technological innovation investment on earnings sustainability having a positive lagging effect. And an encouraging new finding is that under the R&D persistence condition and matching the growth of equity value, continuous investment in technological innovation can drive profitability persistence to increase year by year and drive the continuous improvement of profits. Furthermore, based on the research results of this paper, policy-makers can formulate incentive policies to guide the investment and management of enterprise technological innovation, and encourage high-tech enterprises to continuously invest in technological innovation, so as to drive the continuous improvement of the future profitability of enterprises and promote the healthy development of listed enterprises.
DOI
10.16315/j.stm.2022.04.004
Recommended Citation
FU, Chen-xi and LI, Yan-xi
(2022)
"Can technological innovation investment drive profitability persistence? :Empirical evidence from GEM of Shenzhen Stock Exchange,"
Journal of Science and Technology Management: Vol. 24:
Iss.
4, Article 2.
DOI: 10.16315/j.stm.2022.04.004
Available at:
https://jstm.researchcommons.org/journal/vol24/iss4/2
