The studies, carried out by the National Residential Child Care Initiative (NRCCI), found that, while many young people were provided with stable, caring homes and received expert help, others were not.
In Higher Aspirations, Brighter Futures, the researchers, call for a change in culture to make residential childcare the first and best option for young people, instead of the last resort. Professionals, the public and agencies currently have a negative view of the service, they found.
Adam Ingram, the Minister for Children and Early Years, quickly welcomed the proposals and announced plans to set up a "high level group" to take them forward. It will include representatives from the local authorities, the NHS and care providers.
Among its priorities will be ensuring that those working in residential care are equipped with the right skills; tackling the educational disadvantages faced by looked-after children; and improving the health and well-being of children in care, through the newly-appointed "lead directors" in each NHS board.
Romy Langeland, chair of NRCCI, said: "Children and young people are the centre of our concern. If we want outcomes for them to improve, we need to make appropriate investment."
The NRCCI was set up last year by the Government to respond to challenges facing the residential childcare sector, including the influx of young people with complex needs, many unqualified staff and the mixed experiences of young people in care.
The initiative was established by the Scottish Institute for Residential Child Care, based at Strathclyde University. It comprises councils, health boards, the Scottish Government, charities and government agencies.