Browsing by Author "Sardo, Filipe Manuel Alves"
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- The impact of financing decisions of intellectual capital on firms’ financial performance and on the gap between firm’s book value and market valuePublication . Sardo, Filipe Manuel Alves; Teixeira, Zélia Maria da Silva SerrasqueiroWith the rise of innovation-driven era, knowledge has become the most important feature in the firm’s value creating process. Academics and practitioners have been devoting their attention to the study of intellectual capital (IC) for the last two decades. IC is an emerging and fast-evolving concept and the fact that IC is a multidisciplinary and interdisciplinary concept makes the study of this complex phenomenon challenging. In this thesis, we address several research topics, some of which still are unexplored, regarding the impact of IC on firm’s financial performance, growth opportunities and financing decisions. This investigation comprises sixth empirical studies focusing on Western European countries. The first empirical paper compiled in this Doctoral thesis is entitled “A European Empirical Study of the Relationship Between Firms' Intellectual Capital, Financial Performance and Market Value”. The purpose of this paper is two-fold: (1) to analyse the relationship between firms' IC, financial performance and market value; and (2) to analyse the relationship between ownership concentration and IC performance. Results reveal that IC is an important resource for firms' value creation and human capital is found to be a key factor of firms' wealth. Also, results indicate that ownership concentration and owners' management involvement constrain firms' IC performance. The second empirical paper is entitled “Financial Performance and Intellectual Capital: An Empirical Analysis in the Context of the Euronext Market Countries”. This paper seeks to analyse the impact of IC on financial performance, using the Value Added Intellectual Coefficient (VAIC™) method, in the European context. Results suggest that IC investments have a positive impact on firms’ financial performance in the short and long run. The human capital component is of greater importance in enhancing firms’ financial performance in both previous and current periods. Also, the results reveal that firms investing in R&D have greater financial performance, while the recent financial crisis produced a negative effect on financial performance in 2008 and 2009. The third empirical paper is entitled “Intellectual Capital and Financial Performance Considering the Crisis Period: A European Empirical Study”. The objective of this paper is to analyse the impact of the IC on the financial performance measured by Return on Assets in the European context for the period 2004-2015 as well as the global financial crisis effect on firms’ financial performance. Results indicate that IC efficiency of the current period has a positive impact on the financial performance. The three components of VAICTM Model – capital employed efficiency (CEE), human capital efficiency (HCE) and structural capital efficiency (SCE) of the current period have a positive impact on financial performance, except for SCE of that for the first group of countries has a negative impact on financial performance. Also, findings suggest that the financial crisis negatively affects financial performance on both groups of countries. The fourth empirical paper is entitled “Intellectual Capital, Growth Opportunities and Financial Performance in European Firms: Dynamic Panel Data Analysis”. The purpose of this paper is three-fold: (1) to analyse the impact of IC and growth opportunities on firms’ financial performance; (2) to analyse the moderating effect of IC on the relationship between growth opportunities and financial performance; and (3) to analyse the impact of IC on growth opportunities. Findings reveal that IC efficiency of the current period has a positive impact on firm’s financial performance of high-tech, medium-tech and low-tech European firms and results indicate the non-linearity of the relationship between growth opportunities and firm’s financial performance. Findings suggest that the positive relationship between growth opportunities and firm’s financial performance is enhanced with the efficient use of firms’ IC. Finally, results indicate that the efficient use of IC in the current period has a greater impact on growth opportunities in high-tech firms. The fifth empirical paper is entitled “Intellectual Capital and High-tech Firms’ Financing Choices in the European Context: A Panel Data Analysis” and aims to analyse the impact of IC on high-tech firms’ financing choices. Results suggest that IC investments in high-tech firms have a negative impact on debt, but a positive effect on internal finance and equity issues. High-tech firms seem to rely on equity issues to finance their activities once internal finance is exhausted, avoiding debt to finance innovative projects. High-tech firms face considerable transactions costs, given the moderated adjustment of the long-term debt ratio towards the target ratio. Low ownership concentration brings a higher diversification of financing sources. Finally, the financial crisis had a negative effect on internal finance and a positive effect on long-term debt for high-tech firms. Finally, the sixth empirical paper entitled “Intellectual Capital and Firms’ Financing Decisions in the European Context: A Panel Data Analysis” analyses the impact of IC on firms’ financing decisions, specifically if intensive IC firms follow the predictions of the main finance theories, i.e., trade-off theory (TOT) and pecking order theory (POT) in their capital structure decisions. Our findings show that IC components, such as human capital and structural capital negatively impact on firm’s book leverage in both samples of firms, while the relational capital positively impacts on book leverage in high IC efficiency firms. However, results show that the interaction between the IC components, reduce the negative impact of the human capital and structural capital on book leverage. Regarding the remaining determinants of capital structure, the findings indicate a positive effect of collaterals on book leverage, which suggests the presence of information asymmetry problems as it is the case of high IC efficiency firms that face higher costs of capital and, thereby prefer internal financing due to the lower costs. The negative relationship between profitability and book leverage suggests that both types of firms prefer to resort firstly to internal financing. The negative effect of growth opportunities on book leverage represents potential risk and, therefore, firms reduce their debt levels. The speed of adjustment of debt level towards the target debt ratio is greater in high IC efficiency firms than in low IC efficiency firms.