Influence of intellectual capital on financial results of high-tech companies in russia and the bric countries - Дипломная работа

National Research University Higher School of Economics Faculty of Economic Sciences Influence of Intellectual Capital on Financial Results of High-Tech Companies in Russia and the BRIC Countries Master of Science in Finance Thesis Master’s Programme “Strategic Corporate Finance” Pupshev Andrey Reviewer Scientific Supervisor Mariya Molodchik, Ph.D. Sergey Kuzubov, Doctor of Economic Sciences. Moscow, 2016 Abstract 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. financial capital lag intellectual Contents Abstract Introduction Chapter 1: The literature review Classification Prior researches with similar methodology Prior researches on the BRIC countries data Chapter 2: Methodology and data Hypotheses Methodology: variables Dependent variables Independent variables Control variables Methodology: the models Data Chapter 3: Results and discussion Empirical results Robustness check Research limitations Conclusion Appendix The results of the robustness check Density histograms of variables Correlation matrixes Results of tests on econometric problems References Introduction Company’s financial results are the most important indicators to investors, but they are affected by huge amount of internal and external factors. Nowadays, when economy is becoming more innovative, one of the most significant factors of companies and entire economies is intellectual capital (IC). According to research of Ocean Tomo (2015), up to 84% of firm’s market value can be explained by IC rather than traditional sources of value, and this number has grown significantly from 17% in 1975. Since IC is being valued highly at high-tech companies, the problem of IC influence on enterprise’s performance is the most important for this type of companies. Following to growing role of IC in firms’ value, scholars had been paying their attention on this phenomenon. IC was firstly mentioned in professional literature in 1925. Many researchers started exploring the IC influence on company performance just 25 years ago. Number of investigations has grown significantly since 1990 (Chart 1). Thus, IC is one of the most significant source of companies’ value, and simultaneously it is intensively studied field of finance with significant number of unsolved problems. Chart 1. The number of documents containing words “Intellectual capital” in Scopus database Number of papers dedicated to IC in emerging markets is much lower than IC in developed economies. Taking into account that amount of developing countries is almost five times higher than number of developed economies, this gap seems to be enormous. Speaking of BRIC countries, there are some papers on Brazil (Pitelli(2014)), on Russia (Tovstiga and Tulugurova(2007), Tovstiga and Tulugurova(2009), Andreeva and Garanina(2016)), on India (Kamath(2008), Ghosh and Mondal(2009), Pal and Soriya(2012), Vishnu and Gupta(2014)) and on China (Xinyu(2014), Wang et al. (2014)), and one on the BRICS countries (Ilyin(2014)). Table 1. Classification of research papers by originality of data a