The impact of factoring business announcements on the stock market value of listed companies

The paper examines the relationship between stock market valuation and output growth at the firm level. Specifically, it aims at understanding the impact of firms’ stock market valuation and stock liquidity on the growth of real output. The sample for the study includes panel data of Indian public limited manufacturing firms. The study covers the period from March 2005 to March 2020. Firms with at least two consecutive years of data have been included in the sample. The full sample includes firm-year observations of 877 firms. The findings show that both stock market valuation and turnover ratio have a significant positive impact on the growth of output, even after controlling for other important determinants of output. Further, both stock market variables and bank credit significantly influence the growth of output. This suggests that banks and stock market provide complementary financial services required for the growth and the development of the stock market will not undermine the role of the institution based financial system.
 Keywords: Stock market, market Valuation, stock liquidity and output growth
 JEL Classification: G1

This study aims to determine the effect of EVA and ROI and which is better able to explain the change in Stock market’s value in the companies listed in (ASE) (2006-2015), the researcher addresses a random sample consisting of (46) Company, and uses regression model, which connects the dependent and independent variables.The results of the study shows that the return on investment (ROI) is better than (EVA) to interpret the changes in Stock market’s value, where the coefficient of determination (R2) for the ROI is (22.5%), while the R2 for EVA Only 1.3%.This study also recommends the need to look for additional factors that would explain the changes in stock market's value such as: the degree of leverage, systemic risks, and macroeconomic indicators such as: (interest rates and inflation).

This research studies the environmental performance of the company on the value of stock market of companies admitted to Tehran Stock Exchange during the years 2007 to 2011. For performing this research a database of environmental information and stock market of companies were gathered. The method of information gathering considering the identity of this research was by the two field and library methods. For analyzing the variables of the research (eliminative systematic sampling) two correlation and linear regression methods were used. The results of this research indicate that in studying the environmental performance on value of stock market a number of 2 hypothesis were accepted which means a direct relation and a number of 3 hypothesis were rejected which indicates ni relation with the value of stock market among which waste disposal and decreasing energy consumption had the most significant effect on value of stock market.

PurposeThe metaverse has garnered increasing attention from researchers and practitioners, yet numerous firms remain hesitant to invest in it due to ongoing debates about its potential financial benefits. Therefore, it is crucial to analyze how the implementation of metaverse initiatives affects firms’ stock market value – an area that remains underexplored in the existing literature. Additionally, there is a significant lack of research on the contingency factors that shape the stock market reaction, leaving a noticeable gap in managerial guidance on the timing and benefits of investments in the metaverse. To narrow these gaps, we examine whether and when the implementation of metaverse initiatives enhances firms’ stock market value.Design/methodology/approachBased on 73 metaverse implementation announcements disclosed by Chinese listed firms during January 2021–August 2023, we employ an event study approach to test the hypotheses.FindingsWe find that metaverse implementation announcements elicit a positive stock market reaction. Moreover, the stock market reaction is stronger for technology-focused announcements and smaller firms, or when public attention to the metaverse is higher. Nevertheless, firms’ growth prospects do not significantly alter the stock market reaction.Originality/valueThis study extends the nascent literature on the metaverse by applying signaling theory to offer novel insights into the signaling effect of metaverse implementation announcements on stock market value and the boundary conditions under which the effectiveness of the signal varies. Besides, it provides managers with important implications regarding how to tailor the investment and information disclosure strategies of the metaverse to more effectively enhance firms’ stock market value.

In the Old Economy, the value of a company was mostly in its hard assets--its buildings, machines, and physical equipment. In the New Economy, the value of a company derives more from its intangibles--its human capital, intellectual property, brainpower, and heart. In a market economy, it's no surprise that markets themselves have begun to recognize the potent power of intangibles. It's one reason that net asset values of companies are so often well below their market capitalization. --Vice President Al Gore, speech at the Microsoft CEO Summit, May 8, 1997 I think there is such an overvaluation of technology stocks that it is absurd ... and I'd put our company's stock in that category. --Steve Ballmer, president of Microsoft Corporation, quoted in the Wall Street Journal, p. C1, September 24, 1999 BROADLY SPEAKING, there are two opposing views about the relationship between the stock market and the new economy. In one view, expressed in the quotation from Vice President Gore, intangible investment helps explain why companies' market values are so much greater than the values of their tangible assets. In the other view, expressed, ironically, by the president of one of the leading firms in the new economy, stock market valuations have become unhinged from company fundamentals.(1) Whatever the motivations of Gore and Ballmer in making these comments, their perspectives frame the debate about the relationship between the stock market and the new economy. One way to start thinking about this relationship is in terms of the theory of stock market efficiency. When the stock market is strongly efficient, the market value of a company is, at every instant, equal to its fundamental value, defined as the expected present discounted value of future payments to shareholders. If we abstract from adjustment costs and market power, we can highlight the central role that strong stock market efficiency plays: it equates the company's market value to its enterprise value--that is, the replacement cost of its assets. However, the most readily available measure of enterprise value in a company's accounts, the book value of tangible assets, is typically just a fraction of the company's market value. For companies in the new economy, book value is an even smaller fraction of market value, because these companies rely more on intangible assets than old economy companies do. Hence, the rest of this enterprise value must come from adjusting for the replacement cost of tangible assets and including intangible assets. When price inflation, economic depreciation, and technical progress are modest, the difference between the replacement cost and the book value of tangible assets is relatively small.(2) This means that intangibles account for the remaining difference. Unfortunately, it is difficult to gauge whether intangibles do in fact make up the difference, because they are, by their very nature, difficult to measure. For this reason, the Financial Accounting Standards Board (FASB) calls for a conservative treatment of intangibles: companies must select methods of measurement that yield lower net income, lower assets, and lower shareholders' equity in earlier years than other measures would. Thus expenditures for research and development (R&D), advertising, and the like are expensed rather than treated as assets, even though they are expected to yield future profits.(3) The stock market forms an expected value of these future profits, but the assets generating them will never show up on the balance sheet.(4) Consequently, many researchers argue that the fundamental accounting measurement process of periodically matching costs with revenues is seriously distorted, and that this reduces the informativeness of financial information.(5) The practical appeal of thinking in terms of strong efficiency is that the purported growth of intangible capital that characterizes the new economy provides a ready explanation for the recent sharp rise in stock prices. …

SECURITY PRICES, RISK, AND MAXIMAL GAINS FROM DIVERSIFICATION*

Stock Markets are an important part of the economics of the Arabian countries. Securities tradedon a stock exchange include stock issued by listed firms and bonds. The current study aims toinvestigate the effect of Stock Split on Market Capitalization and Market Value in Hospitalityand Tourism in three Bourses. For the purpose of the study, determinations of whether StockSplit made by Hospitality and Tourism Sector Index’s firms on the Egyptian Exchange, SaudiArabian Stock Exchange and Bahrain Bourse have an effect on the splitting firms. The study useshistorical quantitative data during the period (2010:2018) collected from (ASMs). Based onlinear regression analysis, the findings in Travel and Leisure Index in The Egyptian Exchangeindicated that there is a significant positive relationship effect of Stock Split on MarketCapitalization, Market Value, and Market Value on Market Capitalization. Furthermore, theresults showed that in Tourism and Hotels index in Saudi Arabian Stock Exchange there is asignificant positive relationship effect of Stock Split on Market Capitalization, Market Value,and Market Value on Market Capitalization. In addition, the results showed that in Hotels andTourism in Bahrain Bourse there is a significant positive relationship between of Stock Split onMarket Capitalization, Market Value, and Market Value on Market Capitalization. The resultsalso revealed that Stock Split on Market Capitalization, Market Value, and Market Value onMarket Capitalization was considered the most criterion validity in the three Bourses.

This paper examines the stock market's valuation of a firm's innovative activity. We estimate the market's relative valuation of firms' tangible and intangible assets, focusing on knowledge capital in the form of accumulated stocks of R&D and patents. We tried to improve upon our estimates of the stock market's valuation of knowledge capital embodied in such stocks by bringing in measures of the appropriability environment facing a firm from the Yale Survey on Industrial Research and Development. The responses to Survey questions about the effectiveness of patents as a mechanism for protecting the returns from innovation turn out to be of some use: there is evidence of an interaction between industry level measures of the effectiveness of patents and the market's valuation of a firm's past R&D and patenting performance, as well as its current R&D moves. We find no evidence, however, that other appropriability mechanisms differ enough across industries to leave measurable traces in our data. The structure of the Yale Survey makes it possible to estimate the sampling error in the appropriability measures derived from it. This information was used by us in an errors-in-variables context, but with little success. In the absence of R&D variables, our estimates imply that a two standard deviation increase in our index of patent effectiveness would raise the value of a patent held by our average firm from $0.4 million to $1.0 million. When R&D variables are introduced into the equations, the patents variables become insignificant - R&D expenditures are a better measure of input to the innovative function of firms than patents are of its output - but we estimate that the same experiment would induce changes in q of between 10 and 27 percent for the average firm, approximately doubling the market's valuation of this kind of capital.

This paper uses two different groups of firms, a group of innovative firms and a group of non innovative firms, in computer and software industry and compares them to estimate the stock market's valuation of innovation activities and examines how the stock price response to the innovation events. Two groups show different pattern of stock price during the high-tech boom period, while they have an identical pattern before and after the boom period. The observed different patterns are tested based on Tobin's q theory, and the results show that stock market valued significantly highly on innovation activity during 1996-1999. I employ simulation method to overcome the limitation of event study. This simulation method leads me to conclude that the usual event study method can misidentify the abnormal returns. I find the statistically significant cumulative abnormal returns before patent application events and patent grant announcement events. The information concentration, characteristics of innovation and previous cumulative abnormal returns affect the stock market's response to innovation events.

PurposeThis study aims to explore the impact of carbon neutral announcements on “stock market value” of publicly listed companies in China.Design/methodology/approachThe event study approach is adopted. Market, market-adjusted, Carhart four-factor model and a cross-sectional regression model are employed to examine the impacts of carbon neutral announcements on “stock market value” of Chinese companies based on data from 188 carbon neutral announcements.FindingsCarbon neutral announcements positively impact Chinese shareholder value. Carbon neutral announcements at the strategic level have a more positive and significant impact on Chinese stock market value. Innovative carbon neutral announcements do not significantly cause Chinese stock market reactions. Companies have more positive and significant stock market reactions when the companies make carbon neutral announcements that reflect high supply chain network resilience and heterogeneity and strong supply chain network relationships.Practical implicationsThe findings uncover the business value of carbon neutral activities and provide operations managers in developing countries insights into how to improve enterprises' market value by actively implementing carbon neutral activities.Originality/valueThis paper is the first trial to apply an event study to examine the relationship between carbon neutral announcements and Chinese stock market value from the perspective of announcement level and type and supply chain networks. This paper introduces corporate reputation theory and enriches the application of corporate reputation theory in the field of low-carbon environmental protections and supply chains.

The paper examines the relationship between stock market valuation and output growth at the firm level. Specifically, it aims at understanding the impact of firms’ stock market valuation and stock liquidity on the growth of real output. The sample for the study includes panel data of Indian public limited manufacturing firms. The study covers the period from March 2004 to March 2017. Firms with at least two consecutive years of data have been included in the sample. The full sample includes firm-year observations of 877 firms. The finding shows that both stock market valuation and turnover ratio have a significant positive impact on the growth of output, even after controlling for other important determinants of output. Further, both stock market variables and bank credit significantly influence the growth of output. This suggests that banks and stock market provide complementary financial services required for the growth and the development of the stock market will not undermine the role of the institution based financial system.

This research investigates the value relevance of accounting information, namely earnings and book value of equity (separately and aggregately), related to stock market values and stock market returns models, for Iraqi services companies for the four years 2015 - 2018. The paper finds that, related to stock market values model, the value relevance of earnings and book value has increased separately; the value relevance for earnings increased while it is irrelevant for book value when they are associated. In the other hand and related to stock market returns model, the value relevance of earnings either separately or aggregately has increased while that of book value has decreased. Generally, it is shown that earnings figures can importantly demonstrate variances in stock market values and stock market returns compared with book value figures. Moreover, the findings show that earnings and book value separately are more value relevant in stock market values model. Differently, these variables aggregately are more value relevant in stock market returns model. The study finds earnings can widely help in demonstrating the changes stock market values in Iraqi services companies. The value relevance of accounting information using two models of stock market values and stock market returns has not examined before in one study in Iraq.

This study is to look at the performance of food and baverages companies, by looking at the relationship between solvency variables, activities, and profitability to the stock market value with share traded as intervening variables in the food and baverages sub-sector on the Indonesia Stock Exchange during the period 2014-2019. This study uses the first free variable which is a solvency variable that is projected with debt to asset ratio indicator and debt to equity ratio. This study uses the second free variable which is the activity variable that is projected with total asset turnover, fixed asset turnover and inventory turnover. The third free variable is the profitability variable that is projected with indicators of return on asset, return on equity, net profit margin and gross profit margin. Bound variables are variable stock market value that is projected with price earning ratio indicator, price book value, and earning per share. Intervening variable is share traded with indicator volume traded, value traded, frequency traded and days traded. The research sample used is a group of food and baverages sub-sector stocks during the 6-year observation period, starting from 2014 - 2019, which has financial statements with complete research indicators, financial statements using the value of rupiah currency, namely as many as 16 issuers. This research is in the form of explanatory research and data analysis using Partial Least Square using Smart PLS 3.0 software The results show, solvency variables have no effect on share traded, activity variables affect share traded, profitability variables have no effect on share traded, solvency variables have no effect on stock market value, activity variables have no effect on stock market value, profitability variables affect stock market value, solvency variables have no effect on the value of the stock market, activity variables have no effect on the value of the stock market with share traded as intervening variables, profitability variables have no effect on the value of the stock market with share traded as intervening variables, share traded variables have no effect on the value of the stock market.

This paper examines the mediating role of analyst recommendations in the effect of annual IT investment on annual abnormal stock returns. While the influence of IT on stock market value has been studied in prior literature, there is a need to better understand how stock market investors come to know about intangible assets represented by firms’ IT capabilities. In theory, since IT investments contribute to firm productivity and profitability, it could be that the stock market valuations reflect IT investments indirectly only after IT assets generate tangible performance effects. But that wouldn’t explain the immediacy of the observed relationships between IT and firm market value, nor would it explain the fact that the relationships appear even after controlling for tangible performance factors. Thus, advancing prior research on the internal perspectives of IT value creation, we take an external view and investigate the role of stock analysts in facilitating the market evaluation of firms’ IT applications. Stock analysts collect information about firms’ IT applications and provide informed recommendations to investors in the financial market. As IT applications are known for their complexity and inherent risks, stock analysts can reduce information asymmetry between the firm and investors in the financial markets, thus helping discovering the business value of IT applications. On the basis of Fortune 1000 firms between 1996 and 2007, our analysis suggests that stock analysts play an intricate mediating role in the stock market evaluation of IT applications. Analyst recommendations have a strong mediating role in the effects of enterprise IT systems (ERP and CRM) on firm market value, but a weak to insignificant mediating role in the effects of function IT systems (DSS, HR and AIS). In addition, we find that the mediating role of financial analysts for IT applications is more salient when the firm’s market environments are more uncertain and unpredictable. These findings suggest that analyst recommendations play a critical role in the stock market valuation of firms’ IT applications in situations where the value of such investments is difficult to assess.

The article first addresses the following questions: “Why does gross domestic product (GDP) rises, but the stock market value falls?”; “Among the macroeconomic factors, which factor has a greater impact on the promotion of investment value in the securities market?”. With these questions in mind, we put forward a hypothesis emphasizing on the impact of macroeconomic factors on the value of the stock market based on existing research and used the regression method to verify this hypothesis. The following conclusions were drawn: (1) variables that have a positive nonlinear relationship with stock market value include balance of payments surplus, rising GDP level, M1, the whole society’s fixed asset investment, and national per capita disposable income; (2) variables that have a negative nonlinear relationship with stock market value include deposit, loan interest rate, new RMB loan amount, consumer price index (CPI), and producer price index; (3) deposit reserve ratio has an S-shaped curve relationship with stock market value; (4) exchange rate has an inverted U-shaped curve relationship with stock market value.