Firm Status Research Articles

DO STOCK INVESTMENT STRATEGY AFFECT STOCK PRICES? A CASE STUDY OF SHARIAH-COMPLIANT COMPANIES IN MALAYSIA

This study aims to analyze how the stock market investment strategy using fundamental analysis affects stock prices. Fundamental analysis is an approach used to assess the intrinsic value of a stock based on the company's fundamental factors, including financial statements. This study utilizes historical stock data from 170 Shariah-compliant publicly listedcompanies on Bursa Malaysia and applies various financial ratios and stock valuation methods, such as net profit margin (NPM), price earnings ratio (PER), current ratio (CR), dividend payout ratio (DPR), earnings per share (EPS) and firm size (FS). The sample consists of 170 Shariah-compliant firms from all sectors except for the financial sector of Bursa Malaysia and 20 years maintained listed as status of Shariah-compliant Firms. This research employs panel data estimation techniques for regression analysis with robust panel data estimation technique for statistical inferences. The results indicate that PER, CR, EPS and FS have a positive effect on the stock price. This result confirms that higher in price earnings ratio, liquidity, earnings per share and firm size can increase stock price. The results also found that that NPM and DPR are negatively significant effect to the stock price of Shariah-compliant companies in Malaysia. This research contributes to the understanding of how fundamental analysis methods can be effectively applied in stock market strategies to influence stock prices. It aims to broaden investors' horizons by helping them identify the best strategies using fundamental analysis to generate profits from stock market investments and contribute to economic growth by strengthening economic conditions. This research is among the few studies examining the impact of stock investment decisions using a fundamental analysis approach on the stock prices of Shariah-compliant listed companies in Malaysia.

Business strategies, bureaucratic ties, and firms’ innovation novelty: insights from the World Bank enterprise survey

We draw intuitions from the systemic perspective of innovation to develop and test a conceptual model aimed at examining the various factors capable of influencing the novelty of innovations within firms in Visegrad countries. The empirical results based on the analyses of about 2,132 firms revealed that organisational strategies, external collaborations, engaging in research and development, and the legal status of firms marginally influence innovation novelties. Contrary to our expectations, we found that intellectual property rights and bureaucratic ties do not significantly influence innovation novelties. Business cities are also positively correlated with firms’ innovation novelties whilst legal status is not. The main practical implication of the research is that firm managers in the Visegrad Group aiming to improve and sustain the novelty of innovations should consider strengthening their external collaborations as well as having business strategies that must include innovations as well as research and development (R&D). We discuss some implications for theory and policy.

Risk perception of SMEs: strategic risks, family-related risks, external risks

While risk perception is essential in understanding risk-taking behavior, the risk perception of Small- and Medium-sized Enterprises (SMEs) remains widely unexplored. Analyzing the current business situation of about 1000 German companies, we present stylized facts on the perception of risks. Our first result is that five out of twelve risks are dominantly perceived. The second result is a classification of all possible 4096 risk profiles into eight classes of ideal types of risk perception. Finally, we investigate which factors determine the probability of perceived risks using information on size, industry sector, and business situation of companies, together with data on their equity and family firm status. We use logistic regressions to investigate their impact. Data show that a good business situation lowers the probability of perceiving some of the strategic risks. We strongly argue to focus more strongly on risk perception for creating a better understanding of how SMEs take risks and manage uncertainty.

Decoupling Digital Actions and Narratives: The Role of Firm Status

Decoupling Digital Actions and Narratives: The Role of Firm Status

Family firms, founders, and the cross-section of stock returns

In the light of the large number of signals found empirically to predict firms’ stock returns, some researchers in this field speak of data mining. To avoid this, newly proposed so-called return predicting signals should be based on a theoretical foundation. Building on research on identity and entrepreneurial orientation, I propose that firm status (i.e., “founder CEO” and “family” firms) is a viable signal that predicts part of firms’ stock returns. My results suggest that a “founder CEO firm” indicator has predictive value for explaining part of the cross-section of stock returns while controlling for established risk factors, whereas a “family firm” indicator does not. Additionally, the performance of a risk factor created from a “founder CEO firm” indicator cannot be explained by the common risk factors currently used. Finally, the results from a mean-variance spanning test suggest that it would be beneficial to include a “founder CEO firm” risk factor in the set of common risk factors currently established in the asset pricing literature. My results have several implications for both research and practice.

Sustainability performance of Dutch firms and the role of digitalization: The case of textile and apparel industry

The textiles and apparel industry is a major contributor to economic development while at the same time being one of the most polluting industries due to its lengthy supply chain and resource intensive production operations. To address these sustainability challenges, digitalization is seen as one of the potential solutions. Using the lens of sustainability and digitalization in Supply Chain Management (SCM), this paper analyses the sustainability and digitalization status of Dutch textile and apparel firms. We used a mixed methodology of quantitative text mining of 94 Dutch textile and apparel firms as well as qualitative thematic and coding analysis of experts’ views and opinions on sustainability and digitalization in the Dutch textiles and apparel industry. Quantitative analysis of website data shows that Dutch textile and apparel firms predominantly communicate the environmental, to a lesser extent social, and least of all economic sustainability factors. Keyword analysis also shows that the use of technological keyword indicators is less prominent, while certain technologies such as IoT, sensors and blockchain correlate mostly to environmental sustainability factors. Moreover, qualitative analysis reveals that to address sustainability via digitalization, it is important to link sustainability goals to Key Performance Indicators, which requires data for traceability. We recommend firms to: (1) re-evaluate their business models and assess the extent traceability can be incorporated in their sustainability strategy; (2) enhance stakeholder collaboration within and outside the supply chain to utilize traceability; and (3) proactively use traceability information to improve transparency and accountability to meet legal requirements and address greenwashing. This study contributes to literature by showing the importance of traceability for (a) linking sustainability and digitalization in SCM, b) achieving the ultimate goals of transparency and accountability, and c) predicting demand and supply to address overproduction and waste in the textiles and apparel sector.

Behavioral Factors Influencing Investment Decision of Individual Investor at Nepalese Stock Market

The investment decision of individual investor is influenced by macro/micro economic and behavioral factors. Interest rate, economic growth, inflation, government policy, technological developments, etc., are the macro-economic factors, and firm size, book-to-market equity, cash flow yield, earnings yield, and dividend yield, etc. are the micro-economic factors whereas accounting information, advocate suggestion, personal financial needs, social relevance, self-image/firm-image coincidence, etc. are the behavioral factor. This paper has analyzed the perception of investor on the selected behavioral factors that makes influence on individual investor's investment decisions at Nepalese stock market. Using the structured survey questionnaire, this study concludes that behavioral factors have significant influence on investment decision of individual investor. This study revealed that to get rich quickly, reputation of the firm, feelings for a firm’s products and services, and firm status in industry are the major influencing Self–image/Firm-image factor. On the other hand, friend or coworker's recommendations, family member opinion, and broker recommendation are the most significant influencing Advocate Recommendation factors. Similarly, return maximizing, stock marketability, ease of obtaining borrowed funds, and expected dividends are the major Personal Financial Needs factors, and past trends of stock, information of dividend, price level of other stock, and information of the stock market are the major Market Information factors for influencing investment decision of individual investor at Nepalese stock market.

Workplace sustainability or financial resilience? Composite-financial resilience index

Due to the variety of corporate risks in turmoil markets and the consequent financial distress especially in COVID-19 time, this paper investigates corporate resilience and compares different types of resilience that can be potential sources of heterogeneity in firms’ implied rate of return. Specifically, the novelty is not only to quantify firms’ financial resilience but also to compare it with workplace resilience which matters more in the COVID-19 era. The study prepares several pieces of evidence of the necessity and insufficiency of these two main types of resilience by comparing earnings expectations and implied discount rates of high- and low-resilience firms. Particularly, results present evidence of the possible amplification of workplace resilience by the financial status of firms in the COVID-19 era. The paper proposes a novel composite-financial resilience index as a potential measure for disaster risk that significantly and persistently reveals low-resilience characteristics of firms and resilience-heterogeneity in implied discount rates.

Family firms, management control and digitalization effect

Purpose This study investigates the association between family firm status and the maturity level of management control systems (MCSs) by considering the moderating effect of process digitalization.Design/methodology/approach The authors conducted an empirical analysis on a sample of 106 Italian firms, utilizing both ordinary least squares and ordered logistic regression in this study.FindingsBy resorting to the MCS maturity model proposed by Marx et al. (2012), the empirical findings reveal that family firms do not differ from their nonfamily counterparts regarding MCS maturity. Furthermore, the degree of process digitalization is positively associated with the probability of adopting IT-related technologies in MCSs. Digitalization negatively moderates the relationship between family firm status and MCS maturity, resulting in family firms exhibiting a lower MCS maturity level than their nonfamily counterparts.Research limitations/implications Despite similar efforts in the digitalization process, family firms lag behind in the adoption of IT-enabled MCSs, which suggests that reduced agency issues in family firms constrain the MCS maturity level.Practical implications This study can assist practitioners in implementing a more mature MCS by considering the interplay between internal digitalization processes and family status of the firm, thereby enhancing the decision-making process.Originality/value This study adds novelty to an underexplored area at the intersection of MCSs, family firms and digitalization.

Board gender diversity in China and Eastern Europe

This paper reports on an empirical analysis of 42,094 public/private companies in China and 21 Eastern European countries to grasp the actual state and determinants of board gender diversity in emerging market firms. We confirmed that firms in these countries are comparable to those in advanced nations in terms of the prevalence of firms recruiting female board members and the female share of board directorships. Furthermore, in emerging market countries, internal promotions are used as often as, or even more often than, external ones to recruit women to director positions. The results revealed that board composition and ownership structure are important determinants of the gender diversity of the corporate board in emerging market firms. We also found that the effects of these factors vary significantly depending on the country/region and the listing status of firms and that two qualitatively different decision-making stages related to the appointment of women to board positions (i.e., a decision as to whether to appoint any women to the board and a decision as to how many board positions should be reserved for women) have a substantial impact on the empirical results.

Predicting financial distress using supervised machine learning algorithms: an application on Borsa Istanbul

Purpose- The main purpose of this study is to identify the most significant variables to detect financial distress earlier and to find the best machine learning algorithm model. Methodology-This study has used Support Vector Machine, Logistic Regression, Random Forest and K-nearest neighbors method techniques to predict the financial distress prediction for the companies of Turkey between 2012 and 2021. Findings- As a result of the study, it has been determined that Random Forest provides the best results in terms of precision, accuracy, and recall. Further, this study has found the most important five independent variables to determine the financial distress status of the firms. In this way, it has been found that Current Assets/ Current Liabilities, Working Capital / Total Assets, Gross profit / Revenue, Retained Earnings / Total Assets and Sales growth rate are the most useful variables to determine financial distress status of Turkish firms earlier. Conclusion- This study has concluded that cash ratios and profitability ratios and sales growth are the most important independent variables to determine financial distress one-year ahead. Furthermore, it has been found that random forest is the best machine learning method among other supervised machine learning methods used in this study. Keywords: Financial distress, support vector machine, logistic regression, random forest, k-nearest neighbors JEL Codes: G32, G33, C52

Multinational and exporter wage premia: evidence from southeastern Europe and a panel multiple-treatments approach

We explore how the type of global market entry affects wage premia, classifying firms into four categories: domestic only, domestic exporters, non-exporting multinationals, and exporting multinational enterprises. Using firm-level panel data for Bosnia and Herzegovina, Croatia, and Slovenia for the years 2007–2017 and a multivariate endogenous treatment model based on the approach of Wooldridge (J Econom 68(1):115–132, 1995), we find that the multinational wage premia are mainly driven by the export status of multinational firms. Specifically, domestic exporters and exporting multinationals pay on average higher wages than non-exporting firms, whereas non-exporting multinationals tend to pay lower wages than domestic-only firms.

Accrual and Cash Financial Performance of Information Technology Companies During the COVID-19 Pandemic

Abstract Research background Many companies have experienced a significant impact on their financial performance due to the pandemic period. The effects were mostly negative as a result of by due to the various restrictions that were put in place to limit direct contact among people and restrict mobility during the pandemic. As a result, online contacts increased, therefore, we decided to ask the following research question: Did the performance of Information Technology companies increase during the COVID-19 pandemic? Purpose The aim of the research was to examine the financial performance of Information Technology businesses from 2018 to 2021. In the article, a ratio analysis was conducted using the bi-annual financial data of IT companies. Research methodology The analysis included data accrual and cash results. The objective of the investigation was to assess the economic status of Information Technology firms, utilizing various analytical tools such as ratio analysis. Descriptive statistical methods were also employed to provide an overview of the findings. Furthermore, logit and discriminant models were utilized to summarize the financial outcomes. Results Based on the findings of the study that examined the financial status of Information Technology firms before and during the COVID-19 pandemic, it appears that these companies were able to maintain or improve their financial status during the pandemic, which goes against the general trend observed in the economy. Novelty Our examination of Information Technology firms’ bi-annual accrual and cash financial outcomes amid the COVID-19 pandemic is unique due to the macroeconomic element – the epidemic at such a scale had not taken place in many years of the Polish market economy.

THE COMPETING-RISK ANALYSIS OF POST-IPO DELISTINGS

This paper is working on one IPO panel data to estimate the predicting power of some covariates on future status of IPO firms after going public. These new firms could be delisted due to two major reasons, either acquisition or liquidation. Specifically, our study aims to examine how the possibility of each type of delisting could be determined. There are two main findings in this paper. First, we find that the inclusion of the aftermarket performance in a competing-risk model helps distinguish the impact of those covariates on the two types of delistings. For example, profitability increases the chance of being delisted due to mergers but decreases the chance of being delisted due to bad performance. Second, our evidence indicates that time-varying covariates may impact the delistings in different ways. For instance, profitability appears to affect the voluntary delistings only until last year before delisting. In sum, our paper contributes to the prior literature by shedding light on how voluntary/forced post-IPO delistings are determined.

Gender, firm performance, and FDI supply–purchase spillovers in emerging markets

The paper measures the gender premium (or penalty) in productivity and innovation of firms in 32 emerging economies. We estimate whether the gender status of firms’ ownership in FDI recipient countries matters for the size of knowledge spillovers from linkages between local firms and Multinational Enterprises (MNEs). Furthermore, we explore whether the gender ownership structure of Multinational Enterprises (MNEs) is also vital for spillovers between MNEs and local firms. Our results show that female-owned firms (both local and MNEs) are on average less productive and innovative. Although domestic firms benefit from supplying inputs to MNEs in terms of Total Factor Productivity (TFP) and innovation, a gender handicap cancels out these gains potentially. Female gendered MNEs also impose a similar penalty on knowledge spillovers. As a policy implication, the paper highlights the importance of mitigating gender discrimination for improving productivity and absorptive capacity of local firms in the emerging world.

감사품질이 ESG 수준에 미친 영향

[Purpose] As the societal demand for ESG has increased recently, auditors are facing a situation where non－financial factors need to be considered along with financial factors. This study empirically examines whether the audit quality affects the level of ESG within companies.
 [Methodology] This study measures audit quality using variables such as audit fees, audit hours, and the status of large accounting firms. The ESG level of companies is measured using ESG information from the KCGS. We perform empirical analyses while controlling for various factors that may affect both audit quality and the ESG level.
 [Findings] Our empirical results reveals a significant positive correlation between audit quality and the ESG level of companies. We also perform robustness analysis to address cause issues by adjusting the time difference between audit quality and the ESG level. The results of robustness analysis support our hypothesis.
 [Implications] The findings of this study suggest that audit quality plays an important role in ESG, which is considered a crucial element for corporate sustainability. Our results provide empirical evidence for the need for auditor certification related to non－financial indicators.

Uneasy lies the head that wears a crown: Firm network status and market response to negative rumors

This study investigates whether firm status in networks is a burden in the context of negative rumors. We use a network approach to capture firms' network of affiliations through cross-shareholding and to identify status hierarchies embedded in the relational structure. Using a sample of 1428 negative rumors related to 913 firms during the period 2007–2015, we find that the market responds negatively to negative rumors and that high-status firms suffer more than low-status firms do. Our mechanism tests show that high-status firms attract more attention from the media than low-status firms and that differential media attention plays a mediating role in the relationship between firm status and market response to rumors. In addition, we find that investor sentiment strengthens the status-market response relation. Further analyses show that although high-status firms vigorously deny rumors by rumor clarification announcements, their denial strategy does not function as intended. These results provide robust evidence that status is a burden when encountering negative rumors and that media play an essential role in facilitating the relationship between firm status and market reaction to negative rumors.

What are the Effects of ICT on Intra-Industry Productivity in Sub-Saharan Africa?

Abstract The objective of this work is to assess the effects of ICT on intra-industry productivity in sub-Saharan Africa (SSA). Indeed, perceived through the new school of Knowledge Economy (KE), ICTs present today more opportunities and development prospects for SSA countries. As knowledge, ICTs are now an unlimited resource that SSA countries can draw on to boost productivity in each industry or sector (intra-industry productivity). This paper uses data from the World Bank’s Interprise Surveys from 2004 to 2019 and covers 28 SSA countries. We first estimate the intra-industry productivity in SSA using the Fabricant’s decomposition method, and then we investigate the effects of ICT on it using a generalized least squares regression. The main results show that the level of internet use and the level of telephony use positively and significantly affect intra-industry or basic productivity in SSA. However, the effects of telephony are more significant and larger than those of the internet. Furthermore, sensitivity analyses reveal that the effects of ICT differ according to the industries and export status of firms and the official language of countries. This study recommends that sub-Saharan economies reduce the cost of access to the internet in order to increase its proportion and network of users. It also calls for a better business climate and sufficient energy production.

Family firm status and environmental disclosure: The moderating effect of board gender diversity

AbstractBuilding on agency and resource‐based view theories, this study investigates the level of environmental disclosure (ED) practices of family versus non‐family firms and explores the moderating role of board gender diversity. We test our hypotheses on a 3‐year (2018–2020) panel data sample comprising 324 observations of Italian small‐ and medium‐sized enterprises traded on the Euronext Growth Milan. Findings show that, compared to non‐family firms, companies with a family firm status are characterized by lower levels of ED. Gender diversity on the board, however, moderates this relationship, reducing this gap, to the extent that the family firm status is associated with higher ED when the number of women directors is high enough to constitute a critical mass. We consequently contribute to the studies on family business, corporate governance, and corporate social responsibility.

Firm Status and Scope: A Dynamic View

This paper extends the traditional transaction cost economics (TCE) perspective by taking account of status differences of transaction participants. Based on the status-based model of market competition proposed by Podolny (1993), I examine how transaction cost advantages or disadvantages originating from status differences affect market participants’ economic incentives and strategic objectives regarding their vertical and horizontal scope decision. I also examine long-term consequences of firms’ decisions and the implications of these consequences for high and low status firms. Considering status differences makes it clear that a considerable conceptual overlap exists between TCE and the resource-based view (RBV).