Product Concept Demonstrations in Trade Shows and Firm Value: A Case of Auto Shows

Posted: 25 Feb 2011

See all articles by Taewan Kim

Taewan Kim

Sungkyunkwan University, SKK Business School

Tridib Mazumdar

Syracuse University - Whitman School of Management

Date Written: February 24, 2011

Abstract

Firms routinely demonstrate new product concepts in trade shows long before their eventual launch, presumably to signal the market about their innovative activities. Focusing on the automotive industry, we investigate the effects of automotive concept demonstrations in auto shows on the abnormal stock returns of three U.S. and three major Japanese automakers. Utilizing an event-study methodology, we find that the number and diversity of concepts demonstrated, the degree of their innovativeness, and their readiness to launch positively impact the firm’s cumulative abnormal stock returns. The firm’s past history of converting the concepts into commercial vehicles in a timely manner increases the credibility of the firm using concepts to signal its innovativeness, which adds to firm value. However, as the total number of concepts demonstrated in an auto show increases, it adds to the noise, diminishing the firm’s ability to signal innovativeness.

Keywords: Innovation, signaling, time to market, event study

JEL Classification: M31, O32, D84

Suggested Citation

Kim, Taewan and Mazumdar, Tridib, Product Concept Demonstrations in Trade Shows and Firm Value: A Case of Auto Shows (February 24, 2011). Available at SSRN: https://ssrn.com/abstract=1768465

Taewan Kim

Sungkyunkwan University, SKK Business School ( email )

Korea, Republic of (South Korea)

Tridib Mazumdar (Contact Author)

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
767
PlumX Metrics