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The effects of R&D investments on financial performance : a comparison between high-tech and non-high-tech companies

Bloemendaal, Edgar (2020) The effects of R&D investments on financial performance : a comparison between high-tech and non-high-tech companies.

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Abstract:This study investigates the effect research and development investments have on companies their financial performances. Financial performance is measured with three metrics: Return on Assets, Return on Equity and Profit Margin. The dataset is retrieved from G8 countries. Special attention is paid to high-tech and non-high-tech companies. In total 4512 companies are researched of which 892 are high-tech and 3620 are non-high-tech. An inverted U-shape relationship is tested in this study. Therefore, a squared function of the independent variable: research and development intensity is added. A regression is performed over a period of four years from 2014 until 2017. An inverted U-shape relationship is confirmed in the full sample as well as the split samples. The Return on Assets and Profit Margin show similar optimal percentage and curves, the Return on Equity does not. In the split samples Return on Equity and Profit Margin is larger in the high-tech sample than in the non-high-tech sample, but no statistical difference was found. A robustness check was performed with a 2-year lag that further confirms that findings in this study.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/81782
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