Purpose – Comprehensive R&D project valuation calls for internal information on, for example, R&D investments as well as external information such as market projections that relate to the expectations on product's life and revenue cash flows. Given the versatility of information needs, the...

This paper examines how the real option value of R&D expenditure in financial market changes as time proceeds. It examines the relations between the R&D capital and the firm value for 4 years from the time a firm increases its R&D expenditure unexpectedly. The results show that the financial...