Economics, Econometrics and Finance
3 years ago

Indian Investors Beware: R&D Premium Significantly Impacts Equity Market

Asian Economic and Financial Review
Research & Development Premium in the Indian Equity Market: An Empirical Study
Bhumiswor Sharma, P Srikanth

Paper Summary

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The article investigates the importance of research and development (R&D) in the Indian stock market. The study shows that R&D plays a significant role in determining stock prices in India, especially for companies with high R&D investments. By adding an R&D risk factor to existing pricing models, the researchers found that it improves the accuracy of predicting stock prices in the Indian market. This suggests that R&D is a crucial factor for investors in India to consider when making investment decisions.