Impact of R&D Investment on Profitability of Firms in Biomedical Industry

Chengjing Dong ()
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Chengjing Dong: Shenzhen College of International Education

A chapter in Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022), 2022, pp 697-706 from Springer

Abstract: Abstract The modern technology is developing at a high speed in recent years, therefore, the research and development investment has become an essential factor for firms to attract consumers, gain more market power and increase profits. However, the large amount of investment expenditure may have negative impacts to firms’ current profitability, additionally, firms will even face the risks of investment failure. Due to this, this essay would analyse and discuss the relationship between firms’ research and development investments and firms’ profitability, using data from Chinese A-share-listed firms in the biomedical industry through the regression model, with a time period of 2016–2020 to explore both short-term and long-term effects. Robustness tests are applied to ensure the stability of the results. Moreover, the essay will explore the special patterns of relationship under the normalization of Covid-19 epidemic by comparing regression results in different time periods, therefore provides better suggestions to firms’ further developments.

Keywords: Investments in Research and Development; Biomedical industry; Profitability; Normalization of Covid-19 Epidemic (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-036-7_103

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DOI: 10.2991/978-94-6463-036-7_103

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