Title: Intellectual capital and firms' financing decisions in the European context: a panel data analysis

Authors: Filipe Sardo; Zélia Serrasqueiro

Addresses: Research on Economics, Management and Information Technologies – REMIT, Universidade Portucalense, Porto, Portugal; Unidade de Investigação em Governança, Competitividade e Políticas Públicas (GOVCOPP), Aveiro, Portugal; Instituto Superior de Contabilidade e Administração (ISCA-UA), Universidade de Aveiro, R. Associação Humanitária dos Bombeiros Voluntários de Aveiro, 3810-500, Aveiro, Portugal ' Department of Management and Economics, University of Beira Interior, Portugal; CEFAGE-UBI – Center for Advanced Studies in Management and Economics of the UBI, Estrada do Sineiro, 6200-209 Covilhã, Portugal

Abstract: This study analyses the relationships between intellectual capital components and firms' financing decisions. We collect data for two subsamples formed by high value added intellectual capital and low value added intellectual capital (VAIC) firms belonging to 14 countries in Western Europe. Our findings show that IC components, such as human capital and structural capital are negatively related to firms' book leverage in both samples of firms. In contrast, relational capital is positively related to book leverage in high VAIC firms. The negative relationship between profitability and book leverage suggests that firms for both samples, prefer internal finance instead of debt. The negative effect of growth opportunities and the positive effect of collaterals on book leverage suggest that firms of both samples face information asymmetry problems. The speed of adjustment towards the target debt ratio is greater in high VAIC firms than in low VAIC firms, suggesting lower adjustment costs for the former.

Keywords: dynamic panel data; intellectual capital; financing decisions; high VAIC firms; low VAIC firms.

DOI: 10.1504/IJSTM.2021.10041660

International Journal of Services Technology and Management, 2021 Vol.27 No.4/5/6, pp.394 - 420

Accepted: 28 Sep 2020
Published online: 14 Oct 2021 *

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