Book Value Of Equity Research Articles

Effect of Drawdown Strategy on Risk and Return in Nigerian Stock Market

The study examined effect of drawdown on return in the Nigerian stock market. The study covered the period of 2005 to 2020. Purposive sampling was employed and the sample size comprising 90 regularly traded stocks were used for the analysis. Monthly data sourced from the CBN statistical bulletin and Nigeria Stock Exchange on stock prices, market index, risk-free rate ownership shareholdings, market capitalization, book value of equity, earnings before interest and taxes, total assets and drawdown were used for study. The Fama-MacBeth two-step regression method was employed. The study found that the drawdown has a negative and significant effect on stock returns but has a positive and significant effect on risk in the Nigerian stock market over the whole sample period. Findings also revealed that the sub-period are not stable in terms of the magnitude of effect and significance on risk and return. Our findings contradict the a-priori expectation that drawdown could improve performance through risk minimization and return maximization in the Nigerian stock market. Based on the findings investors and other market participant are encouraged to use drawdown as one of the investment performance measures to guide investors’ expectation and their tolerance on the size of stock market disruption or crashes or rallies in Nigeria.

CEO social capital and the value relevance of accounting metrics: International evidence

Using a unique dataset of CEO social capital between 1998 and 2017, we investigate the degree to which CEO social capital increases or decreases investors’ reliance upon traditional accounting metrics when valuing the equity of non-US firms. We find, ceteris paribus, that investors rely more heavily on the book value of equity, rather than on earnings per share, to value common stock when the firm is led by a CEO with greater social capital. These findings suggest that CEO social capital erodes investors’ confidence in the quality and relevance of earnings; CEOs with higher social capital are entrenched and may engage in rent-seeking behaviors. These findings are robust to country-level development, efficiency, corruption comparisons, and alternative model specifications.

The impact of leverage on earnings management: A case study of listed manufacturing companies in Viet Nam in the period of 2017-2019

The research examines the impact of leverage on earnings management: a case study of listed manufacturing companies in Viet Nam in the period of 2017-2019. Leverage is measured by the ratio of long-term debt to the total book value of equity. Earnings management is measured by using accrual-based measures (AEM) and real earnings management measures (REM). Data comprises 45 manufacturing companies on Vietnam stock markets (HNX and HOSE) that have increasing or high leverage in the period 2017-2019, forming 135 observations. Multiple regression analysis with panel data is used to estimate the impact of leverage on earnings management. Results research show that firm leverage has a positive effect on earnings management using accrual-based measures (AEM) and has a negative effect on earnings management using real earnings management (REM) measures but with no statistical significance. Results research suggest that leverage changes and leverage levels may have differing impacts on earnings management based on AEM and REM. Additionally, the research finds that firm performance (ROA) is associated with positive earnings management, and firm size (SIZE) is associated with negative earnings management.

The impact of IFRS adoption on the value relevance of accounting information in Saudi Arabia

AbstractWe examined the joint and relative value relevance of book value of equity (BVE) and earnings before (2015–2016), after (2017–2018) and during the comparative year (2016) of mandatory adoption of International Financial Reporting Standards (IFRS) in Saudi Arabia. Results show that the accounting information is jointly value relevant (R2), with no significant change between accounting information prepared under Saudi GAAP and IFRS. However, we found a positive change in the relative value relevance of the BVE after IFRS implementation, mainly related to the introduction of fair value measurement. Differences in value relevance were found across variances in company characteristics.

Prediksi Kebangkrutan dengan Altman Z-Score Modifikasi (Studi Kasus Pada PT Smartfren Telecom Tbk Periode 2011-2020)

The purpose of this research was to determine how the prediction of bankruptcy at PT Smartfren Telecom Tbk for the period 2011-2020. The method used in this research is quantitative descriptive research and the data used are secondary data obtained from financial report published by PT Smartfren Telecom Tbk for the period 2011-2020. The analysis technique used in this research is the Altman Z-Score Modification method which uses four ratio variables is Working Capital to Total Assets (X1), Retained Earnings to Total Assets (X2), EBIT to Total Assets (X3), and Book Value Equity to Book Value of Debt (X4). The results showed that the company was in a bad condition because in 2011 to 2020 the company was included in the unhealthy category or had the potential to go bankrupt (distress area). This condition is caused by the low financial ratios owned by the company and the need for follow-up to deal with the problem so that the company avoids the risk of bankruptcy.

THE EFFECT OF RETURN ON EQUITY AND GROWTH ASSETS ON PRICE BOOK VALUE WITH DEBT TO EQUITY AS AN INTERVENING VARIABLE IN REGISTERED METAL SUB-SECTOR COMPANIES ON THE INDONESIA STOCK EXCHANGE

This study aims to determine the effect of Return On Equity, Change In Total Assets on Price Book Value with Debt To Equity as an intervening in metal sub-sector companies listed on the Indonesia Stock Exchange. This study is an associative study with documentation data collection techniques, the population in this study This amounted to 16 companies and samples taken amounted to 14 companies. The sampling technique used is purposive sampling technique. The analytical method used is path analysis. The results showed that Return On Equity had a positive and significant effect on Debt To Equity, Return On Equity had a positive and insignificant effect on Price Book Value, Growth Assets had a positive and insignificant effect on Debt To Equity, Growth Assets had a positive and insignificant effect on Price Book Value, Debt to Equity has a positive and insignificant effect on Price Book Value, Debt to Equity as a mediation on Return On Equity and Price Book Value has a negative and insignificant effect, Debt to Equity as a mediation on Growth Assets and Price Book Value has a negative and negative effect not significant.

Faktor-Faktor Yang Memengaruhi Share Price Sebelum Dan Setelah Periode Konvergensi IFRS

This study aims to analyze the value relevance of accounting information consisting of earnings per share, book value of equity per share, operating cash flow per share, leverage, and dividend payout ratio that affect the share price before and after the IFRS convergence on manufacturing companies listed in the Indonesia Stock Exchange period 2005−2018. The research sample consisted of seven manufacturing companies and multiple linear regression analysis used in this study with EViews 11 version program. The test results concluded earnings per share does not have a significant effect on share price, book value of equity per share does not have a significant effect on share price, operating cash flow per share has a significant positive effect on share price with its value relevance increases after IFRS convergence period, leverage does not have a significant effect on share price, and dividend payout ratio has a significant positive effect on the share price with its value relevance decreases after the IFRS convergence period. The implication of this study is the need to increase value relevance of accounting information, namely operating cash flow per share and dividend payout ratio to help stakeholders, especially investors, in making investment decision which will provide a good signal for investors.

The Impact of Social Responsibility Performance on the Value Relevance of Financial Data in the Banking Sector: Evidence from Poland

Corporate social responsibility (CSR) is inevitably becoming an increasingly important part of almost every business. This is particularly true for the banking industry, which suffered substantial losses in reputation and public trust in the aftermath of the global financial crisis. Not surprisingly therefore, banks around the world have visibly intensified their CSR efforts. One of the key dimensions of CSR regards the reliability and transparency of a firm’s communication with the market, which suggests that information disclosed by responsible companies may be more value relevant. The related evidence, especially in the banking sector, is however modest and mixed. The paper aims, therefore, at empirical investigation of the impact of social responsibility performance on the value relevance of financial data in the Polish banking sector. The research employs multivariate regression analysis based on the Ohlson model and the Chow test for structural breaks. The examined sample covers 154 bank-year observations of 17 banks listed on the Warsaw Stock Exchange from 2009–2020. The results suggest that financial disclosures of banks included in CSR indices are generally more value relevant. Additionally, more responsible banks exhibit higher (lower) responsiveness of market values to net earnings (book values of equity) compared to their less socially responsible counterparts.

A Dynamic Model for Bank Valuation in Iran

In this paper, a model of the relative valuation of the price to book value with the PMG estimation method has been used to assess the value of banks and financial institutions in Iran between 2009:Q1 and 2017:Q4. The results demonstrate that the market price–to–book value ratio underreacts to changes in fundamental variables in the short-run. The correlation coefficient between the estimated price–to–book value ratio and its market value is moderate. Furthermore, the book value of equity of most banks in Iran converges to a negative value, which means price –to- book value ratio loses its power of interpretation.

Pengaruh Market to Book Value of Equity, Debt to Equity Ratio dan Dividend Payout Ratio terhadap Net Profit Margin dimoderasi Jumlah Dewan Komisaris

Financial performance an analysis carried out to see the extent which a company has financial implementation rules. The financial performance really depends on manages the company's finances and carries out the activities, therefore is required improve its ability to manage. Financial performance can be achieved by implementing financial management which involves the completion of important decisions taken by the company, investment and funding decisions, dividend policies. To implement financial decisions properly requires the role of good corporate governance. Research aims to determine the effect of market to book value of equity (MVE/BE), debt to equity ratio (DER), and dividend payout ratio (DPR), partially or simultaneously on net profit margin (NPM) and numbers of commissioners as moderating. By multiple linear regression analysis and moderation, the results MVE/BVE and DER have a significant effect on NPM and number of commissioners. MVE/BVE, DER, and DPR simultaneously a significant effect on NPM and number of commissioners. Number of commissioners moderates the effect of DPR on NPM.

The effect of female presence on corporate boards of directors on the value relevance of accounting amounts: empirical evidence from the European Union

AbstractThis paper investigates the ability of female presence to affect value relevance. Focusing on a sample of 487 entities listed in 18 European countries over the period 2009–2017, it uses a price model to assess the ability of female presence to affect the value relevance of earnings and book value disclosed in the consolidated annual reports of the firms analyzed. Findings offer evidence that female presence on corporate boards increases the value relevance of accounting amounts, providing insights that board composition affects investors’ judgments. Taking into account that in the literature scholars have shown that female presence is associated with market prices, this paper provides a contribution, showing its ability to affect the value relevance of earnings and book value of equity. The research findings suggest that not only the quality of accounting standards but also other factors such as female presence on the corporate board of directors affect accounting practices and, in turn, the quality of financial reporting and value relevance. Its findings offer an additional support to the European Union Gender Equality Strategy 2020–2025 according to which an increase in women's participation in the labor market has a strong, positive impact on the whole economy.

PENGARUH INVESTMENT OPPORTUNITY SET, CORPORATE SOCIAL RESPONSIBILITY, DAN RISIKO BISNIS TERHADAP NILAI PERUSAHAAN

This study aims to determine the effect of investment opportunity set, corporate social responsibility and business risk on firm value. Investment opportunity set is measured using market book value equity, capital expenditure to book value of assets and corporate social responsibility is measured by corporate social responsibility disclosure index and business risk is measured by business risk in banking sub-sector companies listed on the Indonesia Stock Exchange (IDX) in 2015-2019. the method of determining the sample using purposive sampling then obtained a sample of 39 companies. The data analysis technique used is multiple regression analysis. The results showed that the investment opportunity set consisting of market book value equity had a significant effect on firm value, capital expenditure to book value of assets had no significant effect on firm value, corporate social responsibility had a significant effect on firm value, and business risk had no effect on firm value.

Prediksi Kebangkrutan Altman Z-Score Modifikasi Komparasi Perusahaan Terbesar dan Terkecil Sub Sektor Tekstil dan Garmen di BEI

This study aims to find out how the comparison of bankruptcy predictions at PT Argo Pantes Tbk & PT Sri Rejeki Isman Tbk for the 2015-2019 period, with the comparison indicator being total assets. The method used in this study is descriptive research with a quantitative approach and the data used are secondary data obtained from the financial statements published by PT Argo Pantes Tbk for the 2015-2019 period & the financial statements of PT Sri Rejeki Isman Tbk for the 2015-2019 period. The analytical technique used in this study is the Modified Altman Z-Score method that uses four ratio variables, namely Working Capital to Total Assets (X1), Retained Earnings to Total Assets (X2), EBIT to Total Assets (X3), and Book Value of Equity. to Book Value of Debt (X4). The results showed that during the 2015-2019 period (5 years) companies with small asset values (PT Argo Pantes Tbk) tended to have the potential to experience bankruptcy or were in distress compared to companies with large asset values (PT Sri Rejeki Isman Tbk). This condition is caused by the low financial ratios owned by PT Argo Pantes Tbk and the need for follow-up to deal with the problem so that the company avoids the risk of bankruptcy.
 
 Keywords: Bankruptcy Prediction Comparison, Altman Z-Score Modification

Prediksi Kebangkrutan Menggunakan Metode Altman Z-Score Modifikasi pada PT Inti (Persero)

This research aims to find out the financial development and prediction of bankruptcy from PT INTI (Persero) in 2015 - 2019. Descriptive method with a quantitative approach was used in the research. The object of the research is the annual financial statements of PT INTI (Persero) in 2015 - 2019. Data analysis tools uses Microsoft Excel with Altman Z-Score Modification model formula that uses 4 financial ratios that are Working Capital to Total Assets, Retained Earnings to Total Assets, Earnings Before Interest and Taxes to Total Assets, and Book Value of Equity to Total Liabilities. The calculation results will show the company's categories include safe, grey area, and distress. The results showed financial aspects of the company decreased and Z-Score in PT INTI (Persero) in 2015 - 2019 was in the potential for bankruptcy for the past 5 years.

THE EFFECT OF INVESTMENT OPPORTUNITY SET, LAGGED DIVIDEND AND MANAGERIAL OWNERSHIP ON DIVIDEND POLICY

The purpose of this study is to examine the factors that influence dividend policy in companies in the consumption industry sector between 2017 and 2019. The market to book value of equity can be used to calculate the investment opportunity set, the lagged dividend can be calculated using the dividend payout ratio from the previous year, managerial ownership can be calculated as a percentage of total share ownership divided by total company shares, and dividend policy can be calculated using the dividend payout ratio. Purposive sampling procedures were used to collect data, and the results were analyzed using multiple linear regression analysis. This study drew 60 samples from a total population of 168. The data is secondary in nature and derived from financial statements. The results of hypothesis testing indicate that investment opportunity set, lagged dividend, and managerial ownership all have an effect on dividend policy. And, to a lesser extent, the investment opportunity set affects dividend policy, while lagged dividends have no effect on dividend policy.

Determinasi Keputusan Hedging Perusahaan Publik Sektor Pertanian 2013-2019

A multinational company uses a determination of hedging decisions in international trade. The difference in currency values is a risk that will occur and minimize this risk using hedging. This research's independent variable is firm size, profitability, liquidity, growth opportunity, and leverage. The hedging is the dependent variable. This research used secondary data derived from annual financial reports by quantitative approach. The object used in this research is agricultural sector companies on Indonesia Stock Exchange in 2013-2019 with 11 companies as the sample. The data analysis technique used is logistic regression. This study indicates that profitability proxied by return on assets positively affects the company's hedging decisions. Meanwhile, growth opportunity calculated by using a comparison between the market value of equity and book value of equity, leverage proxied by the debt to assets ratio, liquidity proxied by the current ratio, firm size measured using the natural logarithm of total assets does not affect the company's hedging decisions. This research explains that companies with high profitability should do hedging activities to protect the company from adverse risks.

Exploring the Link between Corporate Reputation with Sustainability Leadership and Market Valuation: A Comparative Analysis of Award and Non-Award Companies in PSX

This literature investigated the impact of corporate reputation on companies’ performance and their market valuation in the Pakistan stock market. We attempted to explore whether companies with a high reputation for sustainability also perform better in the Pakistan stock market. Verifying signaling theory and asset-based theories on the Pakistani market, we explained why associations signal their promise to practicality to influence the outer point of view on reputation. A company's standing for being focused on supportability is a theoretical asset that can expand the estimation of an association's normal cash flows or potentially lessen the inconstancy of its cash flows. For finding out the companies with a reputation with sustainability, we used the PSX criteria of the award list. Data was taken from 2014 to 2018 (five years) from the award list announced by Pakistan stock exchange limited. We classify a company as an award company if it continuously got included in the PSX award list in a specified period of four out of five times. Similarly, a non-award company was classified as an accompanying with the same market capitalization as Award Company but not included in the list. In this way, 12 awards and 24 non-award companies were shortlisted. We also include 12 non-award companies of the same sector and market capitalization for sector analysis between reputation and non-reputation. Comparative analysis was carried out through 1-way ANOVA and factor affecting and market valuation of the two groups were explored using regression analysis. These factors included net income (NI), book value of equity (BV), Size, ROE, ROA, and Leverage (LEV) represented by debt ratio. According to expectation, our results of t-test suggested that the mean of all variables for award and non-award companies are significantly different and the mean of award companies are higher than their counter part. One way Anova consequences of sectorial examination demonstrated that concerning net gain, there is huge contrast between the methods for trustworthy organizations and non-respectable organizations in seven out of nine areas. Regression Analysis prove our equation that independent variable has significant impact on dependent variable. Our findings showed that the overall firms with incredible sustainability reputation and managed to name on award list of our sample year has greater valuation by the market when stood out from their counterparty (non-award companies). Hence, our results imply that organizations have to focus on their reputation for corporate sustainability which in turn improve their financial position and enhance their market valuation.

THE VALUE RELEVANCE OF ENVIRONMENTAL PERFORMANCE, CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE, AND RETURN ON EQUITY

This study aims to examine the value relevance of green accounting practice measured by environmental rating through PROPER which is assessed by the Ministry of Environment and Forestry (KLHK) and environmental disclosure activities from an internal party, called sustainability report, of listed mining and agriculture companies on the Indonesian Stock Exchange. This study also tests whether return on equity can strengthen the value relevance of environmental performance and CSR disclosure. The sample consists of 63 firm-year observations. The empirical results showed that the effect of book value of equity and earnings on share price are significant. The study reveals book value of equity exhibits a negative relationship in stock price, while earnings exhibit a negative relationship. However, environmental performance and CSR disclosure are found not statistically significant impact in terms of share price, which conclude they don’t have value relevance. The study also found that ROE hasn’t succeeded to strengthen the value relevance of environmental performance and CSR disclosure.

Financial Statements Effects of Adopting IFRS: Evidence from Listed Manufacturing Firms in Sri Lanka

Accounting Information would be beneficial only if it is relevant to the decisions being made. According to International Accounting Standards Board (IASB), the usefulness of accounting information depends on the fundamental qualitative characteristics of relevance and faithful representation. As a result of harmonization and standardization, International Financial Reporting Standards (IFRS) were adopted in Sri Lanka as a developing country from 1st January 2012. Given the differences that exist between developed and developing countries in the context of the accounting profession and other contextual differences, the impact of IFRS adoption in developing countries remains as an empirical gap in the accounting literature. Therefore, the main purpose of the current study is to examine the impact of IFRS adoption on the accounting information quality, in terms of value relevance and the effect on key financial measures of financial statements in Sri Lanka. Data for the current study are collected from audited annual financial statements and Colombo Stock Exchange (CSE) reports for all the listed manufacturing companies in Sri Lanka, for the period of 10 years from 2008/2009 to 2017/2018. Based on the regression estimates obtained, the study concludes that the value relevance of book values of equity is increased upon IFRS adoption. Further the findings reveal that there are favourable impacts of financial statement measures upon IFRS adoption in listed manufacturing firms in Sri Lanka. These results would be pertinent and significant to both Sri Lankan investors and to accounting standard setting bodies such as the IASB and CA Sri Lanka. Further, the study might also be of value to emerging nations with an investment environment similar to that of Sri Lanka and where IFRS reporting have recently been or will be adopted. Keywords: IFRS Adoption, Value Relevance, Financial Statements Effects, Listed Manufacturing Companies, Sri Lanka.

The Value Relevance of Non-Financial Reporting in Determining the Market Value of Equity

The value relevance of non-financial reporting is a topic of interest in the academic literature, the results of empirical research being often contradictory. In this context, the research objective is analysing the extent to which the disclosure of non-financial information related to sustainable development in the contents of sustainability reports published by companies listed on the regulated market of the Bucharest Stock Exchange (BSE) is influencing their market value. To conduct the analysis, the present study involves the application of multiple linear regression models developed based on the Ohlson (1995) model for a sample of 34 companies listed on BSE between 2015-2019, forming a number of 166 firm-year observations. The research methodology is based on the association between the firm market value and its equity book value, as well as its net income and other relevant information. Therefore, the value relevance is investigated through their impact on the market value. The findings emphasise an increase in relevance in terms of the influence exerted on the market value of capital as a result of reporting on sustainability issues. Moreover, the study highlights an increase in the impact of equity book value and net income on firms’ market value in the period after the adoption of Directive 2014/95/EUD (2017-2019), compared to the previous period (2015-2016). This research complements the literature in the field of sustainability reporting and value relevance, providing empirical evidence on the importance of publishing nonfinancial information in relation to their market value impact.