The impact of R&D intensity, financial constraints, and dividend payout policy on firm value

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In this paper, we show that the effect of R&D on the value of financially constrained firms with dividend payout policy is much stronger than that on the value of firms without dividend payout policy. It is expected that financially constrained firms would tend to avoid paying out dividends. Nevertheless, recent studies on dividends show that the dividend policy of financially constrained firms could be utilized positively to provide a positive signal to the financial market. By extending those studies, our results show that the R&D of financially constrained firms with dividend payout policies have a significantly more positive impact on firm value than financially constrained nondividend payers, and that the managers of financially constrained firms have incentives to use dividend payments to provide a positive impact of R&D performance on their firm value. We suggest that the dividend policy of R&D firms with financial constraints could be utilized to provide a positive signal to the financial market.
Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
Issue Date
2021-05
Language
English
Article Type
Article
Citation

FINANCE RESEARCH LETTERS, v.40

ISSN
1544-6123
DOI
10.1016/j.frl.2020.101802
URI
http://hdl.handle.net/10203/285328
Appears in Collection
MG-Journal Papers(저널논문)
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