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The Impact of Research and Development Investment on the Performance of Portuguese Companies

Author

Listed:
  • Ana Santos

    (ISCAP, Polytechnic of Porto, 4465-004 Porto, Portugal)

  • Ana Bandeira

    (CEOS.PP, ISCAP, Polytechnic of Porto, 4465-004 Porto, Portugal)

  • Patrícia Ramos

    (CEOS.PP, ISCAP, Polytechnic of Porto, 4465-004 Porto, Portugal
    INESC TEC, 4200-465 Porto, Portugal)

Abstract

This study investigates the impact of Research and Development (R&D) investment on the performance of Portuguese companies, specifically addressing the gap in understanding how R&D influences a company’s value and performance. We employ a dynamic panel data model estimated using the Generalized Method of Moments (GMM) to account for potential endogeneity issues. This approach allows us to analyze the influence of R&D investment on the Return on Operating Assets (ROA) for Portuguese companies with significant R&D investments between 2012 and 2019. The analysis reveals that while R&D investment itself may not have a statistically significant short-term impact on ROA, lagged financial performance, leverage, asset turnover ratio, and accounts payable turnover all demonstrate a statistically significant relationship with the dependent variable.

Suggested Citation

  • Ana Santos & Ana Bandeira & Patrícia Ramos, 2024. "The Impact of Research and Development Investment on the Performance of Portuguese Companies," Risks, MDPI, vol. 12(8), pages 1-13, August.
    • Handle: RePEc:gam:jrisks:v:12:y:2024:i:8:p:126-:d:1451381
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    References listed on IDEAS

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    3. Ana Maria Bandeira & Óscar Afonso, 2010. "Value of intangibles arising from R&D activities," FEP Working Papers 372, Universidade do Porto, Faculdade de Economia do Porto.
    4. Ehie, Ike C. & Olibe, Kingsley, 2010. "The effect of R&D investment on firm value: An examination of US manufacturing and service industries," International Journal of Production Economics, Elsevier, vol. 128(1), pages 127-135, November.
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