Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311913 
Year of Publication: 
2022
Citation: 
[Journal:] The European Journal of Health Economics [ISSN:] 1618-7601 [Volume:] 24 [Issue:] 5 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2022 [Pages:] 803-816
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
This paper examines dividend policy issues in the European pharmaceutical industry. This sector is of particular interest because of the high research and development expenditures and the associated risks characterizing the business models of many firms in this industry. In fact, from the perspective of corporate finance theory, this is a particular challenge for the managers of these corporations that may also have implications for the dividend policy implemented by the firms forming this sector. Moreover, the level of internal financing and litigation risks also seem to be high in the pharmaceutical industry. These facts could also affect the payout policy of the firms. Employing techniques of time series analysis, there is no evidence for dividend signaling and clear evidence for dividend smoothing in the European pharmaceutical industry. Given that dividend increases under certain assumptions can negatively affect the firms' ability to finance new investments in general and research and development projects in particular, these results of our empirical investigations could be described as highly plausible.
Subjects: 
Dividend policy
Granger causality
Pharmaceutical industry
Health care firms
Research and development expenditures
Litigation risk
JEL: 
G35
L65
K41
O32
O34
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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