R&D productivity: an exploratory international study

Yuan Ding, Hervé Stolowy () and Michel Tenenhaus

Review of Accounting and Finance, 2007, vol. 6, issue 1, 86-101

Abstract: Purpose - The objective of this exploratory paper is to investigate the impact of R&D expenditures on company performance. R&D activities play an essential role in the future economic development and financial performance of firms. Design/methodology/approach - The research design is based on an earnings equation associating earnings with recorded assets, R&D expenditures and selling, general and administrative expenses (proxying for advertising expenses). The paper determines a rate of return on R&D for each given sample of firms in six developed countries. Findings - The results corroborate previous studies of American companies, which found that reported earnings, adjusted for expensing of R&D, reflect realized benefits from R&D. This study provides further evidence on the positive contribution of R&D activities to future company performance, although this contribution can vary from one country to another. Research limitations/implications - Being exploratory in nature, this paper suggests several areas for investigation. Originality/value - With the exception of some American studies, the economic effectiveness of investment in R&D is seldom demonstrated explicitly by the literature, and to the best of our knowledge, there are no existing studies on R&D productivity taking an international approach.

Keywords: Company performance; Research and development; Investments (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:v:6:y:2007:i:1:p:86-101

DOI: 10.1108/14757700710725476

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