Exploring the Nexus Between Research and Development Expenditures and Corporate Financial Performance: A Sectoral Analysis

Abstract

The financial outcomes of research and development (R&D) expenditures are not instantaneous and straightforward. To explore the varied perspectives of these relationships this study employs Generalized Method of Moments (GMM). Analyses reveals significant variances in different asset classes and in different sectors, besides finding the evidence of multiple regimes. The findings provide insights in the risk-return paradigm of R&D investment, and the successive return, besides helping the policy makers to settle the priority sector to get the expected result in line with the country’s investment policy.