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R & D Intensity and Dividend Policy: Evidence from South Korea’s Biotech Firms

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  • Namryoung Lee

    (School of Business, Korea Aerospace University, Goyang 10540, Korea)

  • Jaehong Lee

    (College of Business, Sangmyung University, Seoul 03016, Korea)

Abstract

In this paper, we examine the relation between a firm’s research and development (R & D) intensity and dividend payout policy with a focus on biotech firms in a sample of 18,253 firm-year observations in South Korea. We find that biotech firms’ R & D intensity is negatively related to dividend payout. Furthermore, for biotech firms, increased internal cash holding accomplished via a lower dividend policy is positively associated with long-term corporate value. In particular, this study reports that the relation between biotech firms’ cash holding and corporate firm value is significantly positive in firms with high stock dividends. Moreover, it shows that non-biotech firms in the maturity stage of the corporate lifecycle tend to distribute cash dividends, a practice that is relatively uncommon among biotech firms in an R & D steady state.

Suggested Citation

  • Namryoung Lee & Jaehong Lee, 2019. "R & D Intensity and Dividend Policy: Evidence from South Korea’s Biotech Firms," Sustainability, MDPI, vol. 11(18), pages 1-21, September.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:18:p:4837-:d:264138
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    5. Rubén Martínez-Alonso & María J. Martínez-Romero & Alfonso A. Rojo-Ramírez, 2019. "Examining the Impact of Innovation Forms on Sustainable Economic Performance: The Influence of Family Management," Sustainability, MDPI, vol. 11(21), pages 1-22, November.

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