Based on the proprietary costs theory, this paper aims to survey whether the regulatory regime (mandatory versus voluntary) of research and development (R&D) narrative disclosures impacts, by the means of a reduced information asymmetry, on the cost of equity capital. In order to construct a disclosure index to investigate the extent and the comprehensiveness of R&D information, the methodology adopted was the content analysis of 77 biopharmaceutical and chemical listed companies’ management reports from eight Western European countries across the period 2005–2009. Hence, we obtained an (unbalanced) panel data of 309 observations. The cost of capital has subsequently been regressed on the disclosure index. Results confirm a larger amount of R&D disclosures whereas information is more regulated, but they do not confirm an inverse relation with the cost of capital.
Biopharmaceutical and Chemical Firms' R&D Disclosure and Cost of Equity: the Impact of the Regulatory Regime / Giovanni Liberatore; Fabio La Rosa. - In: EUROPEAN MANAGEMENT JOURNAL. - ISSN 0263-2373. - ELETTRONICO. - (2014), pp. 806-820.
Biopharmaceutical and Chemical Firms' R&D Disclosure and Cost of Equity: the Impact of the Regulatory Regime
LIBERATORE, GIOVANNI;
2014
Abstract
Based on the proprietary costs theory, this paper aims to survey whether the regulatory regime (mandatory versus voluntary) of research and development (R&D) narrative disclosures impacts, by the means of a reduced information asymmetry, on the cost of equity capital. In order to construct a disclosure index to investigate the extent and the comprehensiveness of R&D information, the methodology adopted was the content analysis of 77 biopharmaceutical and chemical listed companies’ management reports from eight Western European countries across the period 2005–2009. Hence, we obtained an (unbalanced) panel data of 309 observations. The cost of capital has subsequently been regressed on the disclosure index. Results confirm a larger amount of R&D disclosures whereas information is more regulated, but they do not confirm an inverse relation with the cost of capital.I documenti in FLORE sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.