Intangible-Specific Non-Financial Disclosures and Cost of Capital: Evidence from the U.S. Pharmaceutical Industry
Il legame fra coesione territoriale, sviluppo locale e performance d'impresa. Scritti ferraresi in ricordo del professor Antonio d’Atri, Francesco Badia & Greta Cestari (Ed.), 1st edition, 2014, Milano, Italy: FrancoAngeli, ISBN: 9788891708175
42 Pages Posted: 22 Apr 2016
Date Written: 2014
This paper studies the impact of the forward looking intangibles-specific non-financial and textual disclosures on the annual reports (including MD&A, etc.) of 25 biggest Pharmaceutical firms listed in the United States. Using a mixed research method the information from the annual reports are categorized into two sections, (i.) ‘existence of disclosure’, and (ii.) ‘quality of disclosure.’ Evidence from this study shows that, overall, the intangibles-specific non-financial and textual information does not have any explanatory power. However, when the information is sub-divided into communication types (Strategy, Human Resources, etc.) then Customer & Market and Innovation & IPR are found to explain the expected stock returns — which is a measure of a firm’s cost of capital.
Keywords: Non-Financial, Disclosures, Returns, Cost of Capital, Pharmaceutical
JEL Classification: C12, G1, M21, M41
Suggested Citation: Suggested Citation