How Do Firm Characteristics Influence the Relationship between R&D and Firm Value?
Abstract"This paper focuses on how a firm's characteristics affect the market valuation of its research and development (R&D) spending. We derive a valuation model based on the capital market arbitrage condition. Using the generalized method of moments and data from the Eurozone countries to estimate this model yields interesting results. Several firm characteristics (size, firm growth, and market share) positively affect the relationship between firm value and R&D spending, while others (free cash flow, dependence on external finance, labor intensity, and capital intensity) exert a negative effect. Therefore, we conclude that the effectiveness of R&D spending depends on firm characteristics". Copyright (c) 2010 Financial Management Association International.
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Bibliographic InfoArticle provided by Financial Management Association International in its journal Financial Management.
Volume (Year): 39 (2010)
Issue (Month): 2 (06)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0046-3892
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Other versions of this item:
- Queiroz, Valdoceu de & Pindado, Julio & Torre, Chabela de la, 2006. "How Do Firm Characteristics Influence the Relationship Between R&D and Firm Value?," Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en DirecciÃ³n de Empresas". 2006-09, Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de.
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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- Alessandra Tognazzo & Federica Destro & Paolo Gubitta, 2012. "Patenting in family firms," "Marco Fanno" Working Papers 0155, Dipartimento di Scienze Economiche "Marco Fanno".
- Shah, Syed Zulfiqar Ali & Liang, Shuang & Akbar, Saeed, 2013. "International Financial Reporting Standards and the value relevance of R&D expenditures: Pre and post IFRS analysis," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 158-169.
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