English, Article edition: R&D and dividend payments as determinants of corporate value in the UK: Empirical evidence after controlling for endogeneity Jannine Poletti Hughes

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Bookmark: http://trove.nla.gov.au/version/28419
Physical Description
  • article
Language
  • English

Edition details

Title
  • R&​D and dividend payments as determinants of corporate value in the UK: Empirical evidence after controlling for endogeneity
Author
  • Jannine Poletti Hughes
Physical Description
  • article
Notes
  • Purpose – The purpose of this research is to expand on the available literature that suggests a positive effect of R&​D activities and dividend payments on firms' value by considering three additional aspects that differ from previous research. Design/​methodology/​approach – The analysis of the valuation model is performed in a panel dataset of UK firms from 1994 to 2005 (8,559 observations). The methodology consists in applying General Method of Moments (GMM) to control for endogeneity, firm-specific effects and time effects. Findings – The findings indicate that the use of GMM in the valuation model is adequate, given the statistical properties of the data. R&​D stock is shown to be positively associated with corporate value, but its impact is lower than for R&​D expenditure. Both special dividends and ordinary dividends are found to be positively associated with corporate value, supporting the signalling hypothesis which presupposes that managers might use dividends as a signal about companies' future profitability. Originality/​value – This paper contributes to the empirical literature of corporate finance, not only with respect to the effect of special dividends and R&​D stock on corporate value, as opposed to R&​D expenditure and ordinary dividends (as in previous studies for the UK), but also in confirming that, after endogeneity has been controlled, there is a significant and positive effect of these variables but with a different impact.
  • Dividends, Research and development, United Kingdom
  • RePEc:eme:ijmfpp:v:4:y:2008:i:1:p:76-91
Language
  • English
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