How Do Firm Characteristics Influence the Relationship between R&D and Firm Value?

[EN] This paper focuses on how a firm’s characteristics affect the market valuation of its research anddevelopment (R&D) spending. We derive a valuation model based on the capital market arbitragecondition. Using the generalized method of moments and data from the Eurozone countries toestimate this model yields interesting results. Several firm characteristics (size, firm growth, andmarket share) positively affect the relationship between firm value and R&D spending, whileothers (free cash flow, dependence on external finance, labor intensity, and capital intensity) exerta negative effect. Therefore, we conclude that the effectiveness of R&D spending depends on firmcharacteristics