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R&D intensity and firms dividend policy: evidence from BRICS countries

R&D intensity and firms dividend policy: evidence from BRICS countries Given the importance of both research and development (R&D) investments and dividend policy in the growth of firms, this paper examines the moderating effects of investor protection and other country-level governance mechanisms on the relationship between R&D investments and dividend payments in the firms from Brazil, Russia, India, China and South Africa (BRICS countries).Design/methodology/approachThis empirical study uses a sample of 22,073 firm year observations from the BRICS countries over a period of 2008–2020 and employs both ordinary least squared (OLS) and system generalized method of moments (GMM) estimation methods. The GMM estimation controls for unobservable heterogeneity and endogeneity and reduces estimation bias.FindingsThe findings indicate that although R&D intensity is negatively related with the cash dividend payments, with the interaction of investor protection and other country-level mechanisms the relationship between R&D intensity and dividend payments becomes positive. The results further show that investor protection has stronger impact on the relationship between R&D intensity and firm cash dividend payments than other selected country-level governance factors.Practical implicationsThe research findings should encourage the policy makers in BRICS countries to strengthen investor protection and enhance quality of their institutions to make a right balance between retaining their growth potential and maintaining the value of the firms.Originality/valueThis is the first study to provide evidence of the moderating effects of investor protection and other country-level governance mechanisms on the relationship between R&D investments and dividend payments using the data from BRICS countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Accounting Research Emerald Publishing

R&D intensity and firms dividend policy: evidence from BRICS countries

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References (76)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0967-5426
DOI
10.1108/jaar-02-2022-0027
Publisher site
See Article on Publisher Site

Abstract

Given the importance of both research and development (R&D) investments and dividend policy in the growth of firms, this paper examines the moderating effects of investor protection and other country-level governance mechanisms on the relationship between R&D investments and dividend payments in the firms from Brazil, Russia, India, China and South Africa (BRICS countries).Design/methodology/approachThis empirical study uses a sample of 22,073 firm year observations from the BRICS countries over a period of 2008–2020 and employs both ordinary least squared (OLS) and system generalized method of moments (GMM) estimation methods. The GMM estimation controls for unobservable heterogeneity and endogeneity and reduces estimation bias.FindingsThe findings indicate that although R&D intensity is negatively related with the cash dividend payments, with the interaction of investor protection and other country-level mechanisms the relationship between R&D intensity and dividend payments becomes positive. The results further show that investor protection has stronger impact on the relationship between R&D intensity and firm cash dividend payments than other selected country-level governance factors.Practical implicationsThe research findings should encourage the policy makers in BRICS countries to strengthen investor protection and enhance quality of their institutions to make a right balance between retaining their growth potential and maintaining the value of the firms.Originality/valueThis is the first study to provide evidence of the moderating effects of investor protection and other country-level governance mechanisms on the relationship between R&D investments and dividend payments using the data from BRICS countries.

Journal

Journal of Applied Accounting Research – Emerald Publishing

Published: Jul 5, 2022

Keywords: R&D investment; Dividend; BRICS countries; Investor; Governance

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