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This is a Systematic Review study.

September 10, 2025

The Effect of Research and Development (R&D) Investments on the Firm Financial Performance

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Analysis shows R&D investments reduce short-term profit but enhance long-term market value in firms, indicating critical trade-offs.

R&D intensity negatively affects short-term profitability, impacting Return on Assets (ROA).
Long-term market value improves due to R&D investments, as indicated by Tobin's Q, reflecting investor optimism.
Firm size amplifies the positive effects of R&D while financial leverage decreases both operational and market performance.
The findings underscore the trade-off firms face between short-term efficiency and long-term growth through R&D.

Ali et al. (2025) studied this question.

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