R&amp;D investment and risk in Brazil

Silva, Raphael Braga da; Klötzle, Marcelo Cabús; Pinto, Antônio Carlos Figueiredo; Motta, Luiz Felipe Jacques da

doi:10.1016/j.gfj.2017.08.003

Cited by 13 publications

(13 citation statements)

References 23 publications

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“…Intangible assets tend to contribute to the increase in market value, reflecting an increase in perceived economic value, but these effects are not always adequately captured by accounting standards. In this sense, the findings signal the importance of intangible assets in the correct assessment of the company and its performance, in line with the findings in the Brazilian (Kayo, 2002;Honorato, 2008;Oliveira et al, 2014;Almeida & Jordão, 2017) and international context (Aboody & Lev, 1998;Carmeli, 2001;Carmeli & Tishler, 2004;Perez & Famá, 2006), and the importance of disclosing these intangible assets in the quality of accounting information for the capital market (Silva, Klotzle, Pinto & Motta, 2018 ;Moura, Ziliotto & Mazzioni, 2016).…”

Section: Introductionsupporting

confidence: 80%

Analysis of the influence of intangible assets on the performance of Brazilian companies

et al. 2021

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Purpose – The study aims to analyze the relationship between intangible assets and the economic performance of Brazilian public companies. Design/methodology/approach – We calculated the Degree of Intangibility (DI) to segregate companies into two groups: intangible-intensive and tangible-intensive in a sample of Brazilian public companies from 2012 to 2016. We applied the Mann-Whitney test to verify whether there were statistically significant differences between these two groups of companies concerning the Operating Margin, Return on Equity, Return on Assets, Market Value Added and Earning per Share. Findings – The results show that intangible-intensive companies presented higher economic performance in most part of the indicators and years analyzed. In addition, we did not find significant results for Earnings per Share, although the signed rank sum mean values of intangible-intensive are higher than tangible-intensive companies in most part of the years. Practical implications - The findings seek to contribute to discussions about the importance of intangible resources as determinants of competitive advantages and reflecting in higher economic performance, and thus increasing market value. In this sense, investments in intangible resources can be applied in adopting initiatives in markets and definition of strategic positions in companies. Finally, our study seeks also to contribute to capital markets since the relationship between intangible assets and economic performance can be useful in detecting investment opportunities. Originality/value – Previous studies analyzed the relationship between intangible assets and economic performance with other periods and samples. We also measured different proxies for economic performance as Operating Margin, Return on Equity, Return on Assets, Market Value Added and Earnings per Share.

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Section: Introductionsupporting

confidence: 80%

Analysis of the influence of intangible assets on the performance of Brazilian companies

et al. 2021

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“…Camargo, Zanin, Diel, and Bianchet (2016) identified a negative relationship between R&D expenses and firms' financial returns, in G-20 firms, due to the occurrence of returns peaks. In complement, Silva, Klotzle, Pinto, and Motta (2018) showed that firms with greater industry-adjusted R&D intensity are less risky than their counterparts. Further, the evidence also demonstrated that these firms also provide more information to the market about their innovation projects, mitigating a potential undervaluation.…”

Section: Introductionmentioning

confidence: 99%

“…Chander and Mehra (2011) affirm that intangible assets became a key part of the process of value creation for any firm, requiring external communication to the stakeholders. In addition, Silva, Klotzle, Pinto, and Motta (2018) found evidence that firms which provide more information to the market about their innovation projects tend to mitigate their potential undervaluation in, approximately, 40%.…”

Section: Introductionmentioning

confidence: 99%

THE RELATIONSHIP BETWEEN R&D EXPENSES AND THE ABNORMAL RETURN IN BRAZILIAN FIRMS

Oliveira¹,

Magnani

Tortoli

et al. 2019

RAM, Rev. Adm. Mackenzie

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Purpose: This study aims to analyze the relationship between the abnormal return and R&D expenses in Brazilian public firms. Originality/value: The determinants of firms' abnormal return provide information relevant to investors' decision-making. In this context, we verified whether the innovation, measured by R&D expenses, could be a key factor for the abnormal returns in Brazilian firms. Design/methodology/approach: We analyzed Brazilian public firms, from 2009 to 2016, by panel data regressions, in a sample composed by 1,597 firm-year observations. We collected information about R&D expenses in the footnotes. When a firm only mentioned about R&D expenses but did not disclose spent value in the Income Statement, we consider that the firm did not invest in the period and we attribute zero as a value. We highlighted that few firms mentioned R&D expenses in their footnotes and/or declared that they invested in R&D, only 44 firms in all sample, pointing the importance of better disclosure practices of these investments. Findings: The results demonstrate a negative and statistically significant relationship between innovation and the abnormal return. That is, current R&D expenses lead to a lower current abnormal return. It could be linked with the fact that R&D expenses tend to produce returns just in longer periods, demanding more time to recover these investments, due to their complex characteristics related to accounting measurement of R&D expenses. Consequently, an abnormal return could be perceived only in subsequent periods.

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“…Other studies and statistical analyses of R&D spending in similar cases in other emerging economies, such as Turkey (BaŞgoze & Sayin, 2013), China (Lu, 2020;Opoku-Mensah, Yin, & Addai, 2021;Su et al, 2021), India (Majumdar, 2011;Sinha, Mishra, & Patel, 2019;Sharma & Srikanth 2021), and Pakistan (Ghaffar & Khan, 2014), have found an essential linked between R&D expenditure, firm value, and stock returns. Furthermore, the majority of previous studies on R&D return premium at the firm-and industry-level primarily focussed on high R&D economies such as the United States (Callimaci & Landry, 2004;Ehie & Olibe, 2010;Moncada-Paternò-Castello et al, 2010;Dongmei, 2011;Yu et al, 2020), South Korea (Kim & Park, 2020), Brazil (Silva, Klotzle, Pinto, & da Motta, 2018), China (Lu, 2020;Xu, Geng, Wei, & Jiang, 2020;Su et al, 2021), Israel, Finland and Korea (Yury, Albert, & Ilia, 2017). This study fills this research gap by examining the R&D risk factor enriched by the CAPM, 3F, 4F and 5F pricing models to evaluate the effect of pricing traded R&D return premium for the Indian healthcare industry.…”

Section: Randd Investment and Firm Factor Characteristicsmentioning

confidence: 99%

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

Sharma

Pyati²

2022

jmk

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The economic advantages of research and development (R&D) investment have shown conflicting results in empirical studies. This study aimed to examine a different approach, evaluating R&D premium and cross-sectional variability of equity returns, a particular case for the Indian healthcare industry. The primary motivation for this study arrived from the size of the healthcare industry, the world's third-largest and India's largest industry, and the investment made in R&D activities. Results demonstrated that India's annualized R&D premium was significantly greater than the current value, investment, profitability, and momentum premiums. It indicated that the new R&D risk factor in pricing models is a primary reference for Indian equity investors, particularly for companies with R&D spending. Results were robust in evaluating portfolio return using univariate and multivariate tests. Findings suggested that R&D augmented models outperformed conventional pricing models, denoting that the R&D factor undoubtedly revealed priced element and vital risk factor in designing pricing models for emerging countries like India. When adjusting to R&D investment and trading strategies, policymakers, and financial professionals should hereby evaluate their risk-return implications

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R&D investment and risk in Brazil

Cited by 13 publications

References 23 publications

Analysis of the influence of intangible assets on the performance of Brazilian companies

Analysis of the influence of intangible assets on the performance of Brazilian companies

THE RELATIONSHIP BETWEEN R&D EXPENSES AND THE ABNORMAL RETURN IN BRAZILIAN FIRMS

EVALUATING R&D PREMIUM IN THE INDIAN HEALTH AND PHARMACEUTICALS INDUSTRIES

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