Author(s): Namryoung Lee
This study examines how the market evaluates increases in the R&D spending of R&D intensive firms, particularly biotech firms. In addition, the signaling effects of stock dividend distributions are analyzed to investigate whether a firm’s dividend policy mitigates agency conflicts and delivers future sustainable prospects for the firm to the market. The results suggest that the market positively evaluates increases in the R&D expenditures of R&D intensive firms. The findings also confirm the signaling effects of stock dividend distributions. Among R&D intensive firms, these tendencies are stronger for biotech firms. Moreover, the analysis finds that an increase in sales further strengthens the positive association between R&D investment increases and corporate value.