Title: Intellectual capital disclosure and dividend policy: evidence from the Danish biotechnology sector
Authors: Christian Nielsen; Omar Farooq
Department of Business and Management, Aalborg University, Fibigerstræde 11-58, DK-9220 Aalborg, Denmark
Department of Management, School of Business, American University of Cairo, AUC Avenue, New Cairo 11835, Egypt
Abstract: The purpose of this article is to document the relationship between intellectual capital disclosure and dividend policies of biotechnology firms listed on the Copenhagen Stock Exchange during the period between 2001 and 2010. The firms' intellectual capital disclosures were computed from the annual financial reports, while data on dividend policies was retrieved from Worldscope. This paper defines dividend policies by three variables: 1) dividend payout ratio; 2) decision to pay dividend; 3) increase in dividend payout. The results show that firms with higher intellectual capital disclosures not only have high payout ratios, but also have a greater likelihood of increasing and paying dividends. Our findings are consistent with our hypothesis that lower information asymmetries of firms with high intellectual capital disclosure lead to more favourable dividend policies. In opposition to the expected hypotheses, the data does not indicate that intellectual capital disclosure and dividend policies affect firm performance or firm valuation.
Keywords: intellectual capital disclosure; information asymmetry; dividend policies; biotechnology industry; Denmark; annual reports; financial reporting; firm performance; firm valuation.
Int. J. of Learning and Intellectual Capital, 2015 Vol.12, No.1, pp.82 - 102
Submission date: 02 Jul 2014
Date of acceptance: 16 Dec 2014
Available online: 17 Feb 2015