The paper examines whether stock prices fully reflect the value of firms' intangible assets, focusing on research and development (R&D). Despite the challenges posed by the lack of detailed accounting information on R&D and the expensing of R&D expenditures, the authors find that historically, the stock returns of firms engaged in R&D do not significantly differ from those of firms with no R&D. However, they observe that high R&D intensity has a distinctive effect on returns for two groups of stocks: growth stocks and past losers. R&D-intensive growth stocks tend to outperform other growth stocks, while R&D-intensive past losers show strong signs of mispricing. The market appears to undervalue the future opportunities associated with R&D investments. The authors also find that R&D intensity is positively associated with return volatility, suggesting that increased accounting disclosure about R&D may be beneficial. Overall, the paper provides evidence that the stock market does not fully account for the value of R&D investments, leading to potential mispricing.The paper examines whether stock prices fully reflect the value of firms' intangible assets, focusing on research and development (R&D). Despite the challenges posed by the lack of detailed accounting information on R&D and the expensing of R&D expenditures, the authors find that historically, the stock returns of firms engaged in R&D do not significantly differ from those of firms with no R&D. However, they observe that high R&D intensity has a distinctive effect on returns for two groups of stocks: growth stocks and past losers. R&D-intensive growth stocks tend to outperform other growth stocks, while R&D-intensive past losers show strong signs of mispricing. The market appears to undervalue the future opportunities associated with R&D investments. The authors also find that R&D intensity is positively associated with return volatility, suggesting that increased accounting disclosure about R&D may be beneficial. Overall, the paper provides evidence that the stock market does not fully account for the value of R&D investments, leading to potential mispricing.