Abstract
The aim of this paper is to propose an instrument for identification of RD this is the case when investors apprehend a value-destroying overinvestment situation. On the contrary, an increased R&D market valuation should reflect an underinvestment situation, in which any new investment is interpreted as a sign of firm performance enhancement. Finally, it seems that overinvestment situations exist and are met in cases of financial resources abundance, and for equity issuing young firms, whereas underinvestment situations are encountered, predictably, in case of financial resources scarcity.
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