Заявление о самостоятельном характере выпускной квалификационной работы 2
Statement on the independent character of the final qualification work 3
Аннотация 4
Annotation 6
Introdution 9
Chapter 1. literature review 10
Russian business and innovation implementation 10
Innovations, dividends and their interaction 12
Dividends 13
Innovation 13
Dependency between the dividend policy and investments 14
Investments in R&D and dividends’ pay out policies 17
Chapter 2. Research design 21
Hypotheses formulation 21
Research methodology 23
Econometric method 23
Estimation model and Variables 24
Descriptive statistics 26
Specification tests 31
Chapter 3. Results and discussion 38
Specification tests 41
Financial interpretation of results 43
Chapter 4 Conclusion 48
Reference list 50
Appendix 59
Innovative development is relevant for companies of any scale and any specialization. Innovation is necessary for business development. According to the research results CB Insights (Alyabyev et.al., 2018), 85% of managers in the world believe that innovation plays an important role in their business. At the same time, 41% of managers claim that their business is exposed to significant risk associated with possible radical innovations in the industry.
Nowadays, the corporate environment requires a constant search for new sources of competitive advantage for sustained success. One of the ways for modern business to achieve it is through the advantages of innovation. This is a process that creates new products, processes, and ways of working that help increase the knowledge stock (Andy N. and Jasper H., 1998). To make sure the company can continue to grow and improve its products, management needs to figure out how much money to spend on research and development (R&D). In general, the companies that participate in R&D more actively show better growth results and value higher by market than companies doing the opposite (Roper, 1997; Bloom and Reenen, 2002; Tsuda, Henry; and Bulter, 2005). When it comes to allocating resources to investments, management must choose one strategy because it determines the short-term and long-term value of the company, which has an impact on company’s value (Lahiri, P. and Chakraborty, I., 2014). However, due to information asymmetry, managers of tech companies tend to use internal sources to finance the R&D, otherwise the corporate innovation secrets might leak to rivals. The same stands for dividends that are also paid by using cash holdings. Therefore, the investments in innovation might lead to cutting dividends, what undermines the value of such companies and worse the conditions for shareholders (Kim, et.al., 2021). Since, this not a trivial task for managers to optimize dividend pay outs in such a way so it would not affect the innovation development, the core goal of this study is to analyse how dividends policy influence the R&D intensity of Russian companies.
In terms of research gap, this paper will cover the lack of empirical studies on this topic for Russian market and for more relevant time period, as the similar studies covered mostly developed markets, while developing markets quite rarely, especially Russian market. The practical contribution consists in providing recommendations on how to run dividend policy for companies, so to keep enough sources for innovative development. Additionally, this study tests how other financing decisions, like leverage and cash reserves, influence the expenses on R&D, hence providing meaningful insights on how to optimize the capital structure for sake of best innovative development.
The main obstacles that Russian companies face on the way to implementing innovative projects are primarily financial constraints. Last year, they were also supplemented by restrictions related to the introduction of a large number of new sanctions, which disrupted the previous model based on the import of high-tech products. However, this situation has freed up many technological niches for Russian business, moreover, the investments in R&D brings great growth opportunities by itself. Hence, in order to take advantage of this opportunity, Russian managers need to find sources of financing that they lack so much. One of the possible solutions may be the proper allocation of financial resources within the company, for example, cutting dividend payments in favour of R&D investments. This idea is supported by the results of studies that investigated the impact of dividends and R&D expenses on each other.
Therefore, the goal of this research was to study what type of relation exists between the dividend pay outs and R&D intensity for the Russian market. Additionally, this research has tested what financial sources are preferred by the management of companies to finance its innovation activities. To do that the big sample of observations from 2012 to 2021 of Russian companies have been used. Also, the control test and two specification tests have been implied in order to enhance the findings. The OLS, fixed effects and two step System GMM models have been used for these tests.
The effect of dividends is negative for whole sample, strongly negative for highly R&D intensive companies and slightly positive for low R&D intensive companies, thus coinciding with results of similar empirical studies, with the contingency reputation hypothesis and dividend smoothing. The positive correlation for low R&D intensive companies is also supported by the simultaneous dividend policy. The practical recommendation for Russian companies will be to significantly reduce the level of pay outs, if they are highly involved into innovations, keep the same level of dividends, if they are low intensive, in other cases it should be recommended to adjust its dividends pay outs slightly.
The cash holdings have proved to have a positive effect on the R&D intensity, what has been shown in plenty other studies, however, the leverage effect turned out to be also positive, what makes the pecking order model not fully hold for Russian market. Additional tests will be required, in order to distinguish between short-term and long-term debt, since this is assumed that short-term debt might have a positive effect on R&D activities. The managerial implications of the current results will be to increase cash holdings and attract sensible amount of leverage if a company wants to participate in innovations.
The rapid growth of the company and its small size have a positive effect for highly R&D intensive companies. This means that fast growing and relatively small companies have a space for further growth opportunities and can be a good target for investors, who prefer to allocate funds in high-tech companies. This conclusion was supported by the additional tests.
The effect of covid is negative, while of economic crisis 2014 is positive. These results are not intuitively clear, therefore, the additional tests that will address the nature of each macroeconomic turmoil are needed.
