Scale effects of R&D as reflected in earnings and returns

► We explore how R&D-related earnings performance and variability depend on firm size. ► We find that R&D-related earnings performance increases with size. ► We also find that R&D-related earnings volatility decreases with size. ► These results are consistent with R&D productivity increasing with scale. ► We also show that R&D scale is associated with lower market returns.