R&D’s impact on stock returns in the biotechnology industry in the Nordic countries

Abstract

This is a study on the impact of R&D expenditure, expressed in the form of R&D intensity, on stock returns in the Nordic Biotechnology sector. Firms in this sector are generally R&D intensive and the geographic area of the Nordic countries is known for being highly innovative. For the sample, 36 firms are analyzed through the period of 2013 - 2022. The empirical results show that R&D intensity has a statistically significant but small negative effect on the total returns of stocks. The results of this study stand in contrast to previous literature showing a positive relationship between R&D intensity and stock returns. The results are aligned with that strand of previous literature arguing that no significant relationship between R&D and stock returns exists.