Relationship Between R&D Expense and Stock Performance

Peer reviewed: 
No, item is not peer reviewed.
Scholarly level: 
Graduate student (Masters)
Keywords: 
Research and development
Abnormal return
Calendar-time approach
Portfolio strategy
Abstract: 

The objective of this project is to analyze whether a higher level of research and development (R&D)expense generates a higher stock return for firms. Data include firms from all industries in NorthAmerica in 1980-2017. The empirical methods are the firm-year approach and calendar-timeapproach. Our results show that a high R&D expense impacts the stock performance positively. Further, equal-weighted calendar-time portfolios that are long high R&D firms and short low R&Dfirms result in a significant alpha.

Language: 
English
Document type: 
Graduating extended essay / Research project
Rights: 
Copyright remains with the author.
File(s): 
Senior supervisor: 
Amir Rubin
Department: 
Beedie School of Business-Segal Graduate School
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