The impact of R&D Expenditures on Long-Term Shareholder Value Creation: Evidence from the US public firms

Abstract

This dissertation examines the link between research and development expenses and long-term shareholder value creation. To this end, we use a sample of 1,421 US firms representing 30,906 firm-year observations from 2000 to 2022. Our findings show that higher research and development activities are associated with higher long-term shareholder value creation. These results are consistent with the resource-based theory explanation. Further, we test the role of industry volatility on the relationship in question. We find evidence that research and development expenditures further increase the long-term shareholder value creation for volatile industries compared with less volatile ones. Our results are robust to alternative measures and sub-groups. These results provide important implications for shareholders, managers, and policymakers.