Empirical Test of the Impact of R&D Expenditures on the Price-to-Earnings Ratios of Photovoltaic Enterprises

Haocheng Chu

doi:10.6981/FEM.202607_7(7).0022

Authors

Haocheng Chu School of Business, Nankai University, Tianjin, 300221, China

DOI:

https://doi.org/10.6981/FEM.202607_7(7).0022

Keywords:

Photovoltaic Enterprises; R&D Investment; PER; Fixed Effects; Heterogeneity.

Abstract

Amidst China's "dual carbon" goals and accelerating global technological evolution, photovoltaic (PV) enterprises are intensifying their research and development (R&D) investments to secure advantages in technological pathways and cost competitiveness. However, the capital market has historically shown divergence in its valuation of R&D expenditures: R&D can be perceived as an investment to build technological moats or interpreted as "hollow storytelling" that inflates valuations. The Price-to-Earnings Ratio (PER) is a crucial metric for stock valuation. Therefore, this paper utilizes A-share listed PV companies as samples to construct a panel fixed-effects model to examine the impact of R&D expenditure ratio on PER, and further investigates lagged effects and heterogeneity. The results indicate a significant positive correlation between R&D expenditure ratio and PER, and the R&D expenditure ratio from the previous period also shows significant positive influence, suggesting a certain delay in the recognition of R&D value. The positive impact of R&D on PER is stronger within the high R&D group, while it is not significant in the low R&D group. The conclusion for state-owned enterprise samples is unstable due to limited sample size. This paper discusses the aforementioned findings from the perspectives of industry cycles and information environments, and provides implications for corporate R&D resource allocation and investor valuation recognition.

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