With the emergence of a knowledge-based economy, the approach to traditional production factors, including land, capital and labour, which played an important role in the industrial economy, has changed. The growth of enterprises was determined by a smooth combination of expressed experience, values, appropriate selected information and expert insight into a given issue, i.e. knowledge [Davenport, Prusak 1998, p. 5]. This change influenced the approach to resource management, putting the importance of intellectual capital at the forefront as a key resource of human, organizational and relational character. From the end of World War II until the 1980s, pharmaceutical industry experienced a real boom that was possible thanks to the public support of research related to health care, which resulted in effective organizational procedures in the field of drug discovery and development and their commercialisation, as well as improvement of screening programs. Large pharmaceutical companies constituted the oligopolistic core of the market and were doing quite well in the "welfare states" with the national healthcare systems present in most European countries, which offered an organized and publicly available drug market [Orsenigo et al. 2006]. At the end of the 20th century, the approach to innovation changed with the development of molecular biology and new technologies. The role of scientific knowledge increased both at the stage of discovering drugs and biological substances as well as at further stages including clinical trials, commercialization of products and evaluation of their results. Biotechnology companies began to appear. However, they did not compete with large pharmaceutical companies but filled the gap in new fields of science including molecular genetics, protein chemistry and enzymology [Whittaker, Bower 1994]. It became possible due to the development of genetic engineering and the openness of biotechnology companies to innovation and creative financing strategies. At the same time, it was a period in which the pharmaceutical sector was inextricably linked to the biotechnology industry. At the beginning of the 21st century, however, there appeared other problems related to competition from generic manufacturers. For this reason, companies had to secure revenues from existing products and focus on providing them with effective patent protection. This diverted their attention from medical discoveries that should be at the core of the highly innovative companies in the biopharmaceutical sector. As a consequence, drugs that were developed differed from the previous solutions only to a small extent but still required large, long and complex clinical trials. This caused the need to effectively search for funds to cover the costs of clinical trials. In the situation when these funds were missing, the existing funds dedicated to the discovery phase had to be moved to the phases of the final clinical trials. Those practices adversely affected the innovativeness of the entire sector. It should be noted that at some point patents for the main drugs in the product portfolio began to fade, which led to the phenomenon of a patent cliff [Munos, Chin 2011]. Currently, the situation of the biopharmaceutical sector seems to be stable, although the drug development process is expensive and the uncertainty associated with raising funds for financing research and development (R&D) activities is high. In order to ensure efficiency in generating value, companies go beyond the experience created within the organization towards cooperation with other entities. In this way, the era of the monopoly on knowledge ends, and a new logic of innovation begins, reflected in the paradigm of open innovations, which changed the role of the research function. In the open innovation model, people responsible for generating knowledge become knowledge brokers at the same time, care about building relationships with people or external institutions and support processes of sharing information in a safe and reasonable way [Lin 2012; Cooper 2013; Olejniczak et al. 2014]. In practice, this direction has resulted in an increase in the number of technology transfers and the diffusion of know-how among entities involved in R&D. This was possible due to the increasing number of strategic alliances and various types of partnership agreements. The specificity of R&D activity of biopharmaceutical companies is significantly different from this type of activity carried out by entities from other high technology sectors. Biopharmaceutical companies conduct activities aimed at the welfare of society and the protection of human health. In this way, they take accountability towards society, in particular towards patients, doctors and public health insurance institutions. Disclosing information about R&D activities and related issues is of great importance for building the reputation of the organization and creating value for a wide range of stakeholders. It should be emphasized that currently organizations control a huge amount of tangible and intangible assets, which gives managers undisputed power [Maruszewska 2015]. The results of longitudinal studies show that at the end of the 1980s about 80% of the companies' values were generated through the involvement of tangible resources, and only 20% through intangible ones. Two decades later, only about 30% of the companies' values were generated by tangible resources whereas intangibles began to have an increasing share in creating value [Blair, Kochan 2000]. The development of the importance of intangible resources in organizations and their use in R&D processes contributes to the value creation in the form of new innovative products, technologies or knowledge ensuring the economic growth of the organization in long-term. One of the accounting tasks is communicating on the use of controlled resources to a wide range of stakeholders interested in the impacts of the company's activity on a community [Maruszewska 2015, p. 181]. An important issue is also reporting on activities that lead to the transformation of the expenditures involved in the organization into the expected effects and desired results for the entity and its stakeholders. Due to the fact that the R&D processes are long and at every stage determined by the strict regulations the anticipated outcomes may be uncertain or significantly shifted in time. Therefore, from the viewpoint of capital market participants, additional non-financial disclosures in this area are well perceived and expected as they can contribute to the reduction of the cost of capital and information asymmetry between the management and investors [Botosan 1997; Botosan, Plumlee 2002]. In this context, voluntary disclosures also increase the economic value of the company's assets when they relate to reporting on intangible resources, some of which may not be fully reflected in traditional financial statements [Coff et al. 2007]. In addition, the disclosure of certain non-financial information about R&D may be aimed at reducing incentives for competitors to enter the market in which a company operates [Dontoh 1989]. Empirical research included in this monograph contributed to the implementation of three research objectives. First of all, the thematic ranges of nonfinancial disclosures in the area of R&D activities of biopharmaceutical companies were recognized. Secondly, the contexts of non-financial disclosures and factors differentiating the companies in terms of adopting a given context were established. Thirdly, factors significantly influencing the level of non-financial disclosures in the area of R&D activities in biopharmaceutical companies were identified. An achievement of the research objectives was possible due to the realization of partial objectives in the particular chapters of the monograph. The first chapter depicts the biopharmaceutical sector and the conditioning of its R&D activities. The identification and classification of stakeholders in biopharmaceutical companies are an important contribution in this part of the monograph. It was indicated how individual stakeholders can be involved in the organization's activities. Forms of these relations were described due to the degree of stakeholders' impact on the company and the level of their interest in organization's activities. The second chapter explains the theoretical foundations justifying disclosures in corporate reporting, defines the legal framework and indicates projects and recommendations relating to non-financial reporting. The clarification and systematization of issues related to R&D was the significant contribution in this part of the work. The terms such as intangible resources, intellectual capital and intangible assets were explained with reference to terminology appearing in literature and legal regulations. The third chapter describes the methodology of examining non-financial narratives. It focuses on content analysis, methods of text exploration, readability studies, linguistic and sentiment analyses. Identification of the goals of non-financial narrative analysis with reference to annual reporting is an important contribution in this part of the monograph. These goals include the examination of: (1) the texts' attributes, (2) the premises and determinants of disclosures and (3) the consequences of disclosures. The fourth chapter reviews the current state of the art in the area of disclosures on R&D activities and highlights the results of the empirical research studies on these issues. The main contribution in this chapter was to distinguish six groups of factors that were supposed to have an impact on R&D disclosures. These factors included: (1) company size, (2) length of the listing period on the capital market, (3) corporate governance (i.e. ownership structure, board size, independence of non-executive directors or members of supervisory boards, independence of committees on the boards of directors/supervisory boards, CEO duality), (4) financial categories (i.e. intensity of R&D activities, market to book ratio, indebtedness and profitability), (5) accounting policy and (6) external factors (i.e. listing status, sector affiliation, auditor's type, barriers to market entry, legal system and increase in disclosure quality of other entities in the sector). The research results presented in the last chapter are an empirical evidence of the complex activities of biopharmaceutical companies in the rapidly growing innovative high technology sector. These results constitute the author's own contribution to the discipline of economics and finance; in this respect that due to the achievement of the research objectives, two gaps (cognitive and research) were closed. The cognitive gap resulted from the lack of research studies on the area of nonfinancial disclosures in broadly understood R&D activity in reference to biopharmaceutical companies. This monograph fills this gap since it is the first thematic publication on the Polish market on a topic that seems to be an important cognitive area from the viewpoint of biopharmaceutical companies and their broad range of stakeholders. The research gap consisted in the fact that empirical studies have not yet analysed the broader context of non-financial R&D disclosures taking into account the external environment, which implies many activities and events of great importance for R&D area. The proposed model index of non-financial disclosures consisting of six important categories that referred to the areas of R&D activities closed the research gap. The structure of the proposed disclosure index may be justified by the conclusions of the voluntary disclosures guidelines, the composition of the indices developed by other authors and the results of own exploratory studies of annual reports of biopharmaceutical companies. The said disclosure index served to empirically identify factors that might significantly affect the level of non-financial disclosures in the area of R&D activities. The empirical research carried out in the fifth chapter consisting in the exploration and analysis of the narrative included in the annual reports enabled to identify six main thematic modules around which the discussion regarding R&D activity oscillated. The most frequently discussed issues included the following areas: clinical studies, development projects, new products, external environment and accounting policy in the R&D field. These topics have been illustrated on the co-occurrence network representing the relations between the most common words. The results achieved at this stage of the research procedure were used to implement the next two objectives. First of all, the contexts of non-financial disclosures and factors differentiating the companies in terms of adopting a specific context were established. That objective was achieved due to the cluster analysis based on the agglomeration method. For this purpose the vectors of the most common words referring to the R&D activity of individual companies were applied. The examined companies were grouped in terms of similarities in the area of disclosed non-financial issues related to R&D. The evaluation of the content of disclosed non-financial information enabled to observe three approaches adopted by the examined entities and make a synthesis by defining the contexts of disclosures in R&D area. The first approach consisted in presenting a reliable and transparent description of R&D accounting policy (regulatory context of disclosures). The second approach was based on disclosing prospective information on R&D (strategic context of disclosures), whereas the last one consisted in disclosing current issues related with R&D (operational context of disclosures). As part of the implementation of the second objective, relations between the contexts of the discussion and some variables such as R&D costs, R&D intensity, length of annual report, length of R&D narratives and company size were also detected. In order to achieve the third objective five research hypotheses were formulated. Hypothesis 1: The dispersed ownership structure has a positive impact on the level of non-financial disclosures in the area of R&D activity. Hypothesis 2: The size of the company has a positive impact on the level of nonfinancial disclosures in the area of R&D activity. Hypothesis 3: The length of the listing period on the capital market has a negative impact on the level of non-financial disclosures in the area of R&D activity. Hypothesis 4: The indebtedness of a company has a positive impact on the level of non-financial disclosures in the area of R&D activity. Hypothesis 5: The intensity of R&D actions has a positive impact on the level of nonfinancial disclosures in the area of R&D activity. Evidence showed that there were statistically significant relationships between the ownership dispersion and the index of non-financial disclosures in the area of R&D activity as well as between the size of the company and the said disclosure index. This confirmed the validity of the first two research hypotheses. It should be noted that these two relations were positive. In-depth studies were also carried out, including an analysis of the impacts of shareholder dispersion, company size and age, indebtedness and the intensity of R&D actions on the partial indices of nonfinancial disclosures. The results of these studies partially confirmed the empirical results obtained for the aggregate disclosure index. There were proved statistically significant positive relations between shareholder dispersion and partial disclosure indices in the areas of: (1) development, commercialization and patent protection of products, (2) organization of R&D activities and (3) external environment. Interesting conclusions were also provided by the linear regression model describing the relationship between the indicated factors and disclosures about development projects and clinical trials. It showed that both the age of the company and the intensity of R&D actions stimulated the level of disclosures in the field of development projects and clinical trials. Hence, the companies that were listed on the capital market longer and incurred high R&D costs with regards to generated revenues felt obliged to disclose more non-financial information related with medical issues such as descriptions of medical research areas, current phases of clinical trials and their results. Deliberations and research carried out in this monograph provide new knowledge on non-financial disclosures in the area of R&D activities in a much broader context that takes into account the external environment. Inclusion of this category in the aggregated disclosure index modifies the previous approaches of other authors and constitutes the scientific value of this monograph. In addition, the inclusion of disclosures on risk description in the partial indices related with development projects and clinical trials, development, commercialization and patent protection of products, organization of R&D activities and the external environment is an additional scientific distinctive feature. It is worth noticing that this monograph along with scientific values has also practical advantages. Discussion and research results presented in this work can be used primarily by Polish biopharmaceutical companies in the design of nonfinancial disclosure strategies in the area of R&D activities. Investors and stock market analysts may use this book to obtain knowledge on the area of non-financial information they may expect from biopharmaceutical companies. Finally it may be useful for the society, that is, everyone who is interested in what actions involve public funds gained from the reimbursement of medicines and what complex processes contribute to the emergence of new technologies aimed at discovering breakthrough therapies.(original abstract)
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