Tech Stock Valuation

the extraordinary amount of R&D spending during the sample period typical of

very small biotech companies. The 50 corporate leaders in terms of R&D inten-

sity spend, on average, a proportion of sales on R&D that is roughly four times

greater than the proportion of sales devoted to R&D by the top 50 corporate R&D

spending leaders. The fact that extraordinary levels of R&D intensity are typical

of relatively small high-tech companies suggests the importance of economies of

scale or other large-firm advantages when it comes to R&D spending. Notice that

the top 50 corporate leaders in terms of R&D intensity spend an average of $44.8

million per year on ...