Let’s All Say a Good Word for ‘Overvalued’ Companies

Some Investors automatically dismiss stocks that are highly priced relative to their earnings outlook, but new research finds an upside—at least to the overall economy—to overvaluation: It encourages companies to be inventive.

A study in the December edition of the Journal of Financial and Quantitative Analysis suggests that companies with overvalued stock not only are more inclined to pursue innovation, but also are more willing to take risks on ambitious, potentially groundbreaking projects.

Source: WSJ