Corporate Innovation and Resilience in the United States

This paper examines how corporate innovation affects resilience. We use the financial statements and weekly stock price data of over 900 publicly traded companies in the United States, finding that the stock prices of companies reporting research and development expenses before the crisis caused by the COVID-19 pandemic increased by 10%, on average, in its aftermath. We propose two new measures of resilience, impact resistance and recovery speed, to explicate the mechanisms by which innovation enhances resilience. Our findings suggest that, holding other factors constant, companies spending on research and development were less likely to incur a loss due to the crisis and recovered faster.