Development expenditures as source of revenue and market valuation: evidence from the Iberian cluster

Over the last decades, companies have been aligning its strategy with focus on research and development activities, towards future economic benefits. These innovative activities are, in many cases, associated to changes by introducing new methods, ideas, processes, products, and learning practices. Innovation also translates the ability to produce and transform knowledge, contributing to potential economic returns. The current research aims to identify whether development expenditures (application of research findings or other knowledge), recognized in the firms’ annual statement of financial position, have a significant impact on Iberian firms’ revenues and on market valuation. Based on the 68 Iberian non-financial listed companies, with active development projects over the period 2010-2015, an econometric framework was regressed. Portugal and Spain are significantly aligned on the impact of development expenditures on predicting firm’s revenue and firm’s market valuation. This intangible asset, when managed together with other intangible resources, can generate higher value-added inflows, if compared with its isolated effects. Research didn’t evidence any significant time effects neither activity sector effects.info:eu-repo/semantics/acceptedVersio

Are intangibles really a source of future economic benefits? Evidence from the technology sector

Identify the impact of intangibles as drivers of economic future benefits, in the top technological companies in the world. It also aims to identify whether the distribution of those intellectual capital drivers depend on the region and on the accounting standards, used in the preparation of firms’ financial reporting. Using information from the major technological firms for a range of time of five years, a set of intellectual capital proxies were identified and regressed. Three linear models were used, and hypotheses were performed towards the identification of significant impacts on firms’ turnover prediction. A set of intangibles were identified as significant drivers of firms’ turnover. Results suggest that the distribution of those proxies differ among regions and depend on the accounting standards. Firms from North-American evidence higher levels of intangibles, their boards composition is differentiated, additionally tending to increasingly invest in R&D activities. In spite of the limitations, we underline the sample size. However, the current approach can be replicated over time, and based in other rankings, applicable to other activity sectors and using different metrics. Based on the major technological firms worldwide, research adds value to the already known scope of intangibles, by providing additional and complimentary outcomes. A new direction, based on the scope of intangibles accounting standards used in the preparation of financial statements, was flagged towards theory and practice alignment. This research adds value to the current literature by exploring the effects of intangibles in the major technological companies in the world. Focused in a sector strongly marked by innovative strategies, it provides a new and complimentary overview.info:eu-repo/semantics/acceptedVersio

Development expenditures towards firm's turnover and firm's market valuation: Evidence from Portugal and Spain

Countries and firms became a very heavy spender on R&D and on education and training with an increasingly focus based on innovation. It is associated to changes by introducing new methods, ideas, or products. It also translates the ability to produce and transform knowledge, contributing to potential economic inflows. The current research, in the scope of business enterprise R&D intensity policy and European Union strategy 2020, aims to identify whether development expenditures in business enterprises have a significant impact on Portuguese and Spanish firms' economic returns and firm's market valuation, as well as to provide an overview on the convergence with European innovation strategy. Based on 68 Iberian non-financial listed companies, all of them with active development projects on innovation, an econometric framework was regressed. Without convergent R&D main funding source and national targeting rates, Portugal and Spain are significantly aligned on the impact of development expenditures on firm's turnover and on firm's market valuation. If managed together, firms can generate high value-added flows, from those innovative intangible resources.info:eu-repo/semantics/acceptedVersio

Culture and profitability: empirical evidence at a European level

Organizational cultures distinguish different organizations within the same country or countries. When comparing the organizations within the same country differences in national cultures are not relevant but become relevant in comparison between different countries. This paper intends to evidence whether the profitability of companies can be influenced by the national culture. In order to characterize the culture of each country, we used the Hofstede measure of cultural dimensions (1. Power Distance (PDI); 2. Uncertainty Avoidance (UAI); 3. Individualism (IDV); 4. Masculinity (MAS); 5. Long-Term Orientation (LTO); and 6. Indulgence vs Restraint (IND)). Sample was based on the 500 largest European companies rated by the Financial Times 2015. Profitability was measured by the ratios Return on Assets (ROA) and Return on Equity (ROE). Statistical tests were performed to test whether the means of the variables used to measure profitability are statistically equal. The results indicate that companies with higher profitability are from countries with lower Power Distance, lower Uncertainty Avoidance, Long-Term Orientation, and Higher Indulgence.info:eu-repo/semantics/publishedVersio

Intellectual capital and profitability: a firm value approach in the European companies

Intangibles are, at a knowledge-based economy, the most important resources, driving companies towards systematic and sometimes unexpected returns. This paper follows a positivist approach and aims to investigate the association between the degree of intangibility, value of firms and their profitability. Based on the 500 largest European companies, rated by Financial Times, the most relevant insights emerge from the association between firms’ knowledge intensity level and its degree of profitability. These insights consolidate the evidences that immaterial resources act as drivers of future benefits and are embodied on firms’ profitability ratios.info:eu-repo/semantics/publishedVersio

Is the relation between non-controlling interests and parent companies misleading?

This article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts.info:eu-repo/semantics/acceptedVersio