Abstract
Using a sample of 5829 Taiwanese firm-year observations over the 2008-2012 period, we examine the relationship between R&;38;D expenditure and firm valuation. We find a significant positive association between R&D investment and firm valuation as measured by two valuation measures: Tobin's Q and Market-to-book ratio while controlling corporate governance variables. In addition, we find that R&D growth is also a positive and highly significant variable. We also find a significant size effect, indicating the success of small firm R&D innovation. We find insider ownership to be a negative factor and institutional ownership to be positive. Different from US data, board size is positive, while board independence negative.
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