Value-creating potentials and attendant risks for R&D portfolios

Abstract

The purpose of this study is to investigate the trade-off relationship between value creation (characterized by EVA) and attendant risks for R&D portfolios. The empirical data include 485 manufacturing and high tech Taiwanese firms during the years 2004 to 2007. Empirical results indicate that the percentage changes of EVA are sensitive to the time horizons used in amortized R&D capital and also found that the results are highly sensitive to firms with high R&D intensities.