FINANCIAL PERFORMANCE OF MID- AND HIGH-TECH INDUSTRIES IN CRI-SIS AND NON-CRISIS PERIODS

Abstract

Investments in research and development (R&D) are crucial for innovation and economic growth, yet dis-tinctions between high-tech and mid-tech industries may lead to varying financial outcomes. Building on Fuest et al. (2024), this study examines the financial performance of publicly listed high- and mid-tech companies from a shareholder's perspective. Using data from the EU Industrial R&D Investment Scoreboard and LSEG Workspace for 2,349 listed companies, market-capitalization-weighted portfolios were constructed and benchmarked against global and local market indices. Performance was evaluated using the Sharpe ratio and multi-factor asset pricing models (Carhart four-factor and Fama-French five-factor), distinguishing between crisis and non-crisis periods, as well as regional and sectoral variations. Results show that, at the aggregate level, high-tech portfolios consistently and significantly outperform mid-tech and "other" categories on absolute and risk-adjusted bases. Mid-tech indus-tries exhibit resilience during crisis but lower alphas than high-tech industries, and sectoral heterogeneity high-lights diversification benefits. Furthermore, the analysis reveals investment opportunities in R&D-intensive sec-tors, emphasizing crisis resilience and regional competitiveness.