Abstract:
The purpose of this study is to examine the impact of research & development
investment on the financial performance of listed companies in the material sector
in Sri Lanka. The return on assets ratio (ROA) used as a financial performance
measure, and measure the impact of R&D Investment by using Recurrent R&D
expenditure, Capitalized R&D expenditure, Total R&D Expenditure. This study
used data consisting of 19 companies out of 23 Material sector companies in CSE
as a sample for the period of 2015-2020. This research is conducting based on
secondary data.Datawiil be obtained from the information from annual reports of
the companies and also gathered from the website of CSE from 2015 to 2020.
STATA used to analyze data. To assess the effect of research and development
investment on the financial performance ofmaterial sector companies in Sri Lanka,
a correlation and multiple regression analysis was used.
The results show that all the research and development expenditures have a
significant positive relationship with financial performance by considering the
relationship between the research and development eipenditure and financial
performance of material sector listed companies in Sri Lanka. The explanations
may be that the more listed companies in Sri Lanka concentrate on research and
development expenditure in order to investigate and development of their
efficiency and effectiveness. This study offers important implications for the
interested parties of research and development investment in Sri Lanka and for
compahies well. There are no sufficient studies in Sri Lanka to identify the impact
of research & development investment on the financial performance of listed
companies in the material sector. This research will help to fulfillthis research gap.
It provides important implications for managers, directors of the company, and
other related authorities of companies or firms by encouraging and paying more
attention to effective research and development investment in the firm's operations
and highlights the importance of the research and developrnent investments.
