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Regular version of the site

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Andrey Pupshev
Influence of Intellectual Capital on Financial Results of High-Tech Companies in Russia and the BRIC Countries
Strategic Corporate Finance
(Master’s programme)
8
2016
Purpose ‒ The main purpose of this paper is to examine the non-linear influence of intellectual capital (IC) on financial performance of firms from IC-intensive industries in the BRIC countries. The additional one is to find out whether firm’s life-cycle stage important for the above-mentioned influence or not.

Design/methodology/approach ‒ The data include financial information of 318 firms from IC intensive industries (IT, Healthcare, Chemical and Telecom) form the BRIC countries, observed over 16-year period of 2000 to 2015. We used R&D exp. as IC proxy as it is the most appropriate option for high-tech companies. The panel data regressions were conducted using Almon Distributed Lag Model with GMM estimator and Newey-West standard errors.

Findings ‒ Results support the hypothesis about non-linear relationship between R&D exp. and firm’s performance. We found that R&D exp. has significant positive influence on firm’s performance after five years and this impact has reversed U-shape with optimal influence in the range of 14.0% to 14.8% of R&D intensity (R&D exp. to Sales ratio). The hypothesis about higher performance increase from IC at mature firms was also confirmed.

Research limitations ‒ The lack of observations with more than six lags of R&D expenses, the acute absence of balance in the sample in terms of firms’ countries are the main limitations of the study.

Practical implications ‒ Management of high-tech companies may use optimal R&D intensity and frontier of “overinvestment in IC” zone as tentative value in budget planning. Investors may use the findings on mature firms in investment planning.

Originality/value ‒ This study researches non-linear influence of IC on firm’s performance in the BRIC countries, which wasn’t researched before. In addition, it opens discussion of impact of company’s life-cycle stage on IC benefits for firm’s performance.

Keywords ‒ Intellectual capital, R&D, High-tech firms, BRIC.

Paper type ‒ Research paper.

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