This paper aims to investigate the effect of research and development expenditures on profitability and Stock value in Iran capital market during 2003 to 2008. Our sample contains 86 firms from Tehran Stock Exchange (TSE). We employ regression method for test research hypotheses. Findings indicate that spending on R&D in current year cause to earn more profit in future years especially in forth year. Thus, it can be argue that effect of R&D expenditure on firm evaluating measures is significant and positive.
