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

Hasan, Fakhrul and Shafique, Sujana and Das, Bijoy Chandra and Shome, Rajib (2022) R&D intensity and firms dividend policy: Evidence from BRICS countries. Journal of Applied Accounting Research. ISSN 0967-5426

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Abstract

Purpose: 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/Approach: This empirical study uses a sample of 22,073 firm year observations from the BRICS countries over a period of 2008-2020 and employs both OLS and system GMM estimation methods. The GMM estimation controls for unobservable heterogeneity and endogeneity and reduces estimation bias.
Findings: The 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 implications: The 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: This 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.

Item Type:	Article
Keywords:	R&D investment, dividend, BRICS countries, investor, governance
Faculty / Department:	Faculty of Business, Law and Criminology > Liverpool Hope Business School
Depositing User:	Fakhrul Hasan
Date Deposited:	16 May 2022 10:38
Last Modified:	16 May 2022 10:38
URI:	https://hira.hope.ac.uk/id/eprint/3535

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