SUMMARY
Research and development costs are of interest for many researchers. The old debate of expensing or capitalizing and deferent reaction of profit or loss firms' indictors to these costs is the main concern of such studies. Most of these investigations have been conducted in developed countries. In the same way, the purpose of this research is investigating the impact of R&D costs on performance of loss firms in a developing country. We have used profitability, stock market value, and sales growth as performance indicators of a company. In this way, we selected a sample of 113 listed firms in Tehran Stock Exchange in the 2003-2012 time periods. In addition, we used Pooled/panel regression analysis to test the research hypotheses. According to the results, the R&D costs have a negative and significant relationship with the performance indexes. In other words, R&D costs in loss firms do not improve their performance.