 R&D and performance persistence: Evidence from the United KingdomSeraina Anagnostopoulou and Mario Levis The International Journal of Accounting, 2008, vol. 43, issue 3, 293-320 Abstract: There is compelling evidence from both the United States and United Kingdom suggesting that R&D investment is positively related to operating and/or market performance. This study extends prior research on R&D and valuation by further examining the sustainability or persistence of operating growth and market performance as a result of R&D investments. We use a large dataset of U.K. companies during the period 1990-2003 and our findings confirm the relation between R&D intensity and consistent growth in Sales and Gross Income, but only in the cases when a firm needs to engage in R&D activity because of the industry in which it operates. Moreover, our evidence indicates not only a positive relation between R&D intensity and subsequent risk-adjusted excess returns among firms that engage in R&D as testified by prior literature, but we also show that R&D intensity improves persistence in excess stock returns: the highest R&D-intensity firms are found to earn higher risk-adjusted excess returns more consistently than the sample median return, compared to lower R&D-intensity firms, as well as firms with no R&D. We interpret this finding as consistent with at least some form of market mispricing. Date: 2008 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:43:y:2008:i:3:p:293-320 Access Statistics for this article The International Journal of Accounting is currently edited by A. R. Abdel-Khalik More articles in The International Journal of Accounting from Elsevier |
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