Author:
Arianpoor Arash,Eslami Khargh Fatemeh
Abstract
Purpose
This study aims to investigate the effect of intangible capital (e.g. intangible investments and research and development (R&D) expenditures) on future profitability in an emerging economy and the moderating role of economic policy uncertainty (EPU) for companies listed on the Tehran Stock Exchange.
Design/methodology/approach
To this aim, information about 210 companies during 2014–2021 was collected. This study calculated EPU based on the inflation rate, interest rate, exchange rate and economic growth.
Findings
The results showed that both R&D expenditures and other intangible investments positively affect future profitability. Moreover, EPU decreases the positive effect of R&D expenditures and other intangible investments on future profitability. Hypothesis testing based on ordinary least squares and generalized method of moments regressions confirmed these results. This study emphasizes the urgent need to adjust how they operate the business during the COVID-19 pandemic.
Originality/value
The nature and degree of intangible assets and R&D expenditures in firms in emerging markets is an interesting area of research. However, empirical studies in this area have not led to any unanimous conclusion in emerging markets. Moreover, intangible assets and R&D expenditures become very important in the economy affected by the financial crisis and conditions of uncertainties. In light of the COVID-19 crisis, significant changes occurred at all levels and affected accounting-related issues, and the present study highlighted COVID-19. The findings of this research will not only help the managers of companies in developing countries but also, because of the dearth of similar research, they can help managers in developed countries and the global community.
Subject
Strategy and Management,Accounting,Business and International Management
Reference74 articles.
1. Aaron, A. (2021), “Withdrawal of management earnings guidance during the covid-19 pandemic”, Pao Yue-kong Library, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, available at: https://theses.lib.polyu.edu.hk/handle/200/11315
2. Does intangible assets affect the financial performance and policy of commercial banks’ in the emerging market?;Plos One,2022
3. The relationship between market value, capital expenditures, value creation and product market power;Iranian Journal of Accounting, Auditing and Finance,2021
4. The impact of business strategy and annual report readability on financial reporting quality;Journal of Asia Business Studies,2023