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Financial Performance and Innovation: Evidence From USA, 1998-2023

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  • Panteleimon Kruglov
  • Charles Shaw

Abstract

This study explores the relationship between R&D intensity, as a measure of innovation, and financial performance among S&P 500 companies over 100 quarters from 1998 to 2023, including multiple crisis periods. It challenges the conventional wisdom that larger companies are more prone to innovate, using a comprehensive dataset across various industries. The analysis reveals diverse associations between innovation and key financial indicators such as firm size, assets, EBITDA, and tangibility. Our findings underscore the importance of innovation in enhancing firm competitiveness and market positioning, highlighting the effectiveness of countercyclical innovation policies. This research contributes to the debate on the role of R&D investments in driving firm value, offering new insights for both academic and policy discussions.

Suggested Citation

  • Panteleimon Kruglov & Charles Shaw, 2024. "Financial Performance and Innovation: Evidence From USA, 1998-2023," Papers 2403.10982, arXiv.org.
    • Handle: RePEc:arx:papers:2403.10982
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    1. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-151, Spring.
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    1. Abdelrazaq Farah Freihat & Ayda Farhan & Ibrahim Khatatbeh, 2025. "The Nexus of Research and Development Intensity with Earnings Management: Empirical Insights from Jordan," JRFM, MDPI, vol. 18(1), pages 1-18, January.
    2. Anis Jarboui & Hassen Elarem, 2025. "Exploring the Relationship between Entrepreneurial Orientation, Innovation Spirit, and Financial Performance: A Case Study of Tunisian Banks," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 63-83.

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