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Excess Commitment in R&D

Marius Guenzel & Tong Liu

The Review of Financial Studies2026https://doi.org/10.1093/rfs/hhag026article
FT50UTD24AJG 4*ABDC A*
Weight
0.50

What the paper says

We document that firms exhibit “excess” commitment to R&D projects and examine its consequences for innovation outcomes. Using detailed data on pharmaceutical firms’ clinical trial projects, we find that trial delays, empirically uncorrelated with multiple project-quality measures, substantially reduce firms’ subsequent project-termination propensity. This result remains robust when we use variation in clinical trial site congestion to instrument for unexpected delays. Excess commitment intensifies when CEO compensation has greater stock-price sensitivity and the CEO is responsible for the project’s initiation. Our findings have broader implications: delay-driven commitment reduces new drug project initiations, with further evidence suggesting efficiency losses for firms.

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https://doi.org/https://doi.org/10.1093/rfs/hhag026

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@article{marius2026,
  title        = {{Excess Commitment in R&D}},
  author       = {Marius Guenzel & Tong Liu},
  journal      = {The Review of Financial Studies},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/rfs/hhag026},
}

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Excess Commitment in R&D

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.