Sales Growth Rate Research Articles

Firm Dynamics and the Origins of Aggregate Fluctuations

What drives aggregate fluctuations? I test the granular hypothesis, according to which the largest firms in the economy drive aggregate dynamics, by estimating a dynamic factor model with firm-level data and controlling for the propagation of firm-level shocks using a multi-firm growth model. Each time series, the growth rate of sales of a specific firm, is decomposed in an unobserved common macroeconomic component and in a residual that I interpret as an idiosyncratic firm-level component. The empirical results suggest that, once I control for aggregate shocks, idiosyncratic shocks do not explain much of U.S. GDP growth fluctuations.

PCA를 활용한 기업실적 예측변수 생성

There have been many studies on statistical forecasting on firm`s performance and stock price by applying various financial indicators such as debt ratio and sales growth rate. Selecting predictors for constructing a prediction model among the various financial indicators is very important for precise prediction. Most of the previous studies applied variable selection algorithms for selecting predictors. However, the variable selection algorithm is considered to be at risk of eliminating certain amount of information from the indicators that were excluded from model construction. Therefore, we propose a firm`s performance prediction model which principal component analysis is applied instead of the variable selection algorithm, in order to reduce dimensionality of input variables of the prediction model. In this study, we constructed the proposed prediction model by using financial data of American IT companies to empirically analyze prediction performance of the model.

A comparison of alternative models for estimating firm’s growth rate

The growth rate plays an important role in determining a firm’s asset and equity values, nevertheless the basic assumptions of the growth rate estimation model are less well understood. In this paper, we demonstrate that the model makes strong assumptions regarding the financing mix of the firm. In addition, we discuss various methods to estimate firms’ growth rate, including arithmetic average method, geometric average method, compound-sum method, continuous regression method, discrete regression method, and inferred method. We demonstrate that the arithmetic average method is very sensitive to extreme observations, and the regression methods yield similar but somewhat smaller estimates of the growth rate compared to the compound-sum method. Interestingly, the ex-post forecast shows that arithmetic average method (compound-sum method) yields the best (worst) performance with respect to estimating firm’s future dividend growth rate. Firm characteristics, like size, book-to-market ratio, and systematic risk, have significant influence on the forecast errors of dividend and sales growth rate estimation.

The effects of return on investment, sales growth rate, volatility of investment, cash flow and structure of institutional shareholders on the ratio of debt to equities

This paper presents a study to measure the effects of return on investment, sales growth rate, volatility investment, cash flow and structure of institutional shareholders on the ratio of debt to equities. The study selects 102 firms listed on Tehran Stock Exchange and, using regression technique with Panel data, examines five different hypotheses over the period 2008-2012. The results indicate that there was a negative and meaningful relationship between return of investment and the ratio of debt to equities and a positive and meaningful relationship between sales growth and the ratio of debt to equities. Moreover, there were positive and meaningful relationships between volatility of investment as well as cash flow and the ratio of debt to equities. Finally, the survey has indicated that there was a negative and meaningful relationship between the structure of institutional shareholders and the ratio of debt to equities.

Competitive strategies and company performance of Taiwanese firms

Competitive strategy is an important determinant of firm survival and success. The strategy that a firm employs reflects the specific competitive methods that its managers emphasise as well as the broad pattern showing how these methods are combined for use in the firm. In an extensive study of companies from the USA and Japan, Kotha et al. (1995) found that US and Japanese companies use different competitive strategies to achieve their success. Since both of these countries have extensive economic dealings with Taiwan, and both are leading economic powers, it seems likely that many Taiwanese companies would emulate their' competitive strategies. This paper investigates the competitive strategy parameters of a large sample of Taiwanese companies, matched to Kotha et al.'s sample firms in being distributed across a wide range of industries. It finds that a majority of these companies emulate the US companies' strategies, though there also are many that emulate the Japanese. Many do not follow either model, but instead carve out a niche for themselves by developing what might be called unique Taiwanese strategies. An analysis of variance indicates that of the sample firms, those that follow a more Eastern directive (Japanese or Taiwanese) have better performance as defined by growth rate of sales and employee morale, job satisfaction and commitment.

Capital Structure and Firm Performance: An Analysis of Manufacturing Firms in Turkey

Capital structure is one of the most important issues for firms in order to achieve better financial and market performance. The main objective of this study is to examine the relationship between capital structure and firm performance. We investigate 130 manufacturing firms listed on Borsa Istanbul for the period of 2008-2013 using panel data analysis. We utilize short term debt to total asset (STDTA) and long term debt to total asset (LTDTA) as proxies of financial leverage (independent variables). Return on equity (ROE), return on asset (ROA), earnings per share (EPS) and Tobin‟s Q ratio were used as proxies of firm performance (dependent variables). Sales growth rate and firm size were used as control variables in the study. We find that STDA has a significant negative relationship with ROA, EPS and Tobin‟s Q ratio. Besides, we find that LTDTA has a significant negative relationship with ROE, EPS and Tobin‟s Q ratio, while it is positively and significantly correlated with ROA.

Prioritisation of technological capabilities to maximise the financial performance by fuzzy AHP

Over the last few decades, companies have been investing in technological competency steadily and increasingly. Companies investing in technological competency assumed that such investments would improve operating efficiency and thus improve financial performance. Technology is a business driver and thus can be utilised to support competitive margin. The firm, whose technology competency level is higher than rivals, will generate and introduce more innovative products. The model of this study is tested on a sample of 13 experts in four coil companies in Iran which own about 90% of the market share in the coil industry. In this study, technological capability factors (technology management, process technology, and product technology) are prioritised according to the competitive advantage levels (profit, return on investment, sales growth rate, liquidity, long–term debt to equity ratio, and working capital) and competitive priorities (cost, price, quality, flexibility, and time) using fuzzy analytic hierarchy process (FAHP) with the aim of maximising the financial performance at coil manufacture industry. The results indicate that within Iran coil industry, process technology is more important than product technology and technology management for coil manufacture industry.

Assesment of forest products market potential as a basis for forest sector development in the Jablanica District

One of the main tasks of marketing research is the assessment of market potential. The aim of this research was to analyze the dynamics of selling and buying of wood and nonwood forest products (NWFPs) within the analyzed enterprises in the Jablanica District. The purpose of this research was to examine the possibilities for the development of small and medium-sized enterprises (SMEs) directed towards a sustainable use of forest products in the area of the Jablanica District. The subject of this research is: purchased and placed quantities in the analyzed enterprises, as well as the prices that were realized for the products, with special emphasis on commercially important mushrooms. The research was conducted in the territory of Jablanica and it included five enterprises engaged in the purchasing, processing and sale of NWFPs and the Forest Estate (FE) ?Forest? Leskovac. The purchase of raw forest fruits and herbs had a growing trend (+ 17.8%) in the 2006-2013 period. The average annual growth rate (AAGR) of sales was 3.4% for medicinal plants and 30.6% for mushrooms. The AAGR of NWFPs export was + 32.6%. The placement of beech wood assortments (K class) recorded a purchase AAGR of app. + 12.7%. In 2013, it was found that the NWFPs with the highest market value were: blueberry, dried boletus and chanterelle. In 2013, their total gross revenue in the domestic market amounted to 82.3 million RSD, whereas the total gross revenue of the analyzed beech wood assortments was 87 million RSD.

Public Bank Guarantees and Allocative Efficiency

We use a natural experiment and matched bank/firm data to identify the effects of bank guarantees on allocative efficiency. We find that with guarantees in place unproductive firms invest more and maintain higher rates of sales growth. Moreover, firms produce less productively. Firms also survive longer in banks’ portfolios and those that enter guaranteed banks’ portfolios are less productive. Finally, we observe fewer economy-wide firm exits and bankruptcy filings in the presence of guarantees. Overall, the results are consistent with the idea that guaranteed banks keep unproductive firms in business for too long and prevent their exit from the market.

Firm Dynamics and the Origins of Aggregate Fluctuations

What drives aggregate fluctuations? I test the granular hypothesis, according to which the largest firms in the economy drive aggregate dynamics, by estimating a dynamic factor model with firm-level data and controlling for the propagation of firm-level shocks using multi-firm growth model. Each time series, the growth rate of sales of a specific firm, is decomposed in an unobserved common macroeconomic component and in a residual that I interpret as an idiosyncratic firm-level component. The empirical results suggest that, once I control for aggregate shocks, idiosyncratic shocks do not explain much of U.S. GDP growth fluctuations.

Macroeconomic and Firm Specific Determinants of Stock Returns: A Comparative Analysis of Stock Markets in Sri Lanka and in the United Kingdom

This paper examines the relationship between macroeconomic and firm-specific determinants of stock returns of Sri Lanka and United Kingdom (UK). Our results are based on the fixed effects regression models since those perform statistically better than the random effects and pooled OLS models for Sri Lankan data and the fitted one-way fixed effects firm factor regression indicates that Return on Assets ( ROA) and sales growth rate play a significant role in explaining variation in stock returns in Sri Lankan companies while one-way random effect firm factor model in UK shows that E/P ratio, B/M ratio, fixed assets growth rate, size and ROA are the most dominants priced factors in London Stock Exchange (LSE). The explanatory power of regressions increases considerably when we incorporate macroeconomic indicators controlling for firm effects and results show that inflation, GDP and exchange rate remain leading predictors of stock returns variation in both Colombo Stock Exchange (CSE) and LSE whereas unemployment and Foreign Portfolio Investments (FPI) become statistically significant only in CSE. Thus, it is noted that stock prices of Sri Lankan and UK companies are sensitive to both company and macroeconomic fundamental changes hence, the stock market analysts and investors find that they can make fundamental base trading strategies as publicly available information play a key role in predicting future returns bringing the conclusions of the Sri Lankan stock market is in semi-strong form efficient in doubt.

Cross Channel Effects of Search Engine Advertising on Brick & Mortar Retail Sales: Meta Analysis of Large Scale Field Experiments on Google.com

Abstract We investigate the cross channel effects of search engine advertising on Google.com on sales in brick and mortar retail stores. Obtaining causal and actionable estimates in this context is challenging: Brick and mortar store sales vary widely on a weekly basis; offline media dominate the marketing budget; search advertising and demand are contemporaneously correlated; and estimates have to be credible to overcome agency issues between the online and offline marketing groups. We report on a meta-analysis of a population of 15 independent field experiments, in which 13 well-known U.S. multi-channel retailers spent over $4 Million in incremental search advertising. In test markets category keywords were maintained in positions 1-3 for 76 product categories with no search advertising on these keywords in the control markets. Outcomes measured include sales in the advertised categories, total store sales and Return on Ad Spending. We estimate the average effect of each outcome for this population of experiments using a Hierarchical Bayesian (HB) model. The estimates from the HB model provides causal evidence that increasing search engine advertising on broad keywords on Google.com had a positive effect on sales in brick and mortar stores for the advertised categories for this population of retailers. There also was a positive effect on total store sales. Hence the increase in sales in the advertised categories was incremental to the retailer net of any sales borrowed from non-advertised categories. The total store sales increase was a meaningful improvement compared to the baseline sales growth rates. The average Return on Ad Spend (ROAS) is positive, does not breakeven on average although several retailers achieved or exceeded break-even based only on brick and mortar sales. We examine the robustness of our findings to alternative assumptions about the data specific to this set of experiments. Our estimates suggest online and offline are linked markets, that media planners should account for the offline effects in the planning and execution of search advertising campaigns, and that these effects should be adjusted by category and retailer. Extensive replication and a unique research protocol ensure that our results are general and credible.

Wal-Marts Dilemma In The 21st Century: Sales Growth Vs. Inventory Growth

Wal-Mart has been a leader in the retail industry since 1980s. In the 21st century, Wal-Marts RFID initiative is another innovation for Wal-Marts supply chain management. Wal-Marts recent business target in the 21Century is making a higher sales growth rate than inventory growth rate. Comparing with financial ratios of Wal-Marts competitors, Wal-Mart has significantly better ratios for days-in-inventory, inventory-sales-ratio, and cash-conversion-cycle. However, there is no significant evidence of better ratios for supply chain related profit ratio. Regression analysis reveals that while days-in-inventory has a similar effect on both sales growth rate and inventory growth rate, supply chain ratio has more effect on inventory growth rate than sales growth rate.

Ограничения структурирования трансграничных сделок слияний и поглощений при учете ожиданий рынка

Ожидания рынка влияют на стоимость сделок слияний и поглощений, что наиболее актуально для трансграничных сделок ввиду более высокого уровня неопределенности и среднего размера сделки. Положительная реакция рынка, выраженная в росте рыночной капитализации покупателя, свидетельствует о том, что рынок при оценке ожидаемых финансовых показателей компаний после объединения настроен более оптимистично, чем покупатель. Отрицательная реакция рынка, наоборот, свидетельствует о возможной переоценке покупателем будущих финансовых результатов сделки M&A. В обоих случаях происходит изменение рыночной капитализации покупателя в момент публичного объявления, которое является косвенной выгодой или издержками от сделки для акционеров. Существующие методы оценки стоимости трансграничных сделок M&A игнорируют влияние реакции рынка на стоимость сделки и рыночную стоимость компании-покупателя, а также основываются только на фундаментальных факторах создания стоимости, таких как рентабельность и темпы роста продаж, размер денежного потока и уровень долговой нагрузки. При структурировании сделки ожидания рынка не учитываются, а реакция рынка в виде изменения рыночной стоимости покупателя принимается как неконтролируемая потеря или выигрыш, который не влияет на стоимость сделки M&A. Таким образом эффект влияния ожиданий рынка в настоящее время не учитывается в структуре вознаграждения сделок слияний и поглощений. Необходимо усовершенствовать структурирование трансграничных сделок M&A путем включения дополнительной условной компоненты, которая бы учитывала падение рыночной стоимости покупателя в результате негативной реакции рынка на сделку.

Predicting above-median and below-median growth rates

Multiannual periods of consecutive above-median or below-median growth rates in operating performance, called runs, have a substantial influence on firm valuations. For estimating the probability of an above-median or below-median run and utilizing information efficiently, we employ a stepwise regression to automatically identify the parsimonious indicator-specific set of economically and empirically meaningful variables. Our novel approach uses logit models to distinguish firms that will persistently grow above or below the median over a period of up to 6 years. The predictive power for sales growth rates is highest to discriminate between above-median and below-median growth rates, while the future behaviour of operating income and net income growth rates can partially be explained for below-median growth rates.

Operating Performance Following Acquisitions: Evidence from Taiwan's IT Industry

AbstractThis paper examines the performance of Taiwanese firms following acquisitions and finds that, when contrasted with the acquisitions that take place in the U.S., Taiwanese acquirers exhibit negative industry‐adjusted accounting performance. The negative performance is mostly driven by firms with low growth opportunities, but is mitigated under more concentrated shareholdings and better board structures. These findings suggest that while weak corporate governance at the country‐level may adversely affect the overall effectiveness of the takeover market in Taiwan, there is substantial cross‐sectional variation in corporate governance at the firm‐level. The evidence also shows that the announcement of an acquisition is accompanied by a positive announcement effect, and the poor operating performance might be related to the decreased assets turnover and sales growth rate.

Determinants of Working Capital Investment in South Africa: Evidence from Selected JSE-Listed Firms

This paper analyses the determinants of working capital investments of 92 companies listed on the Johannesburg Stock Exchange (JSE) over the period 2001-2010. Working capital management has grown in significance from being a survival issue to a strategic and competitive tool. Using the Generalized Method of Moments estimation, the study found that firms pursue target levels of current assets. However, the adjustment process is relatively slow. The study found that leverage, short-term finance and fixed investment significantly influence the level of working capital investment, while operating cash flows, state of the economy, firm size and sales growth rate were found to be statistically insignificantly related to working capital investment. The study recommends that managers understand the driving factors of working capital investment since working capital investment influences the value of the firm.

The market trend analysis and prospects of scaffolds for stem cells.

BackgroundScaffolds are one of the three most important elements constituting the basic concept of regenerative medicine, and are included in the core technology of regenerative medicine along with stem cells and tissue engineering. Stem cells are very important technology because they are directly responsible for the regenerative treatment of the disease and the damaged tissue, but with regards to the technology and the products that use stem cells exclusively, there is a technical limitation of limited survival rate and the engraftment rate of the transplanted cell, and rather than recovering the damaged tissue fundamentally, there is a limit that the concept is more of just another medicine treatment using cells.A scaffold is a natural or synthetic biocompatible material transplanted into a human body to be used as the exclusive treatment or as an assisted method of another treatment of a disease and for the recovery of damaged tissue. Therefore, according to the characteristics of the tissue to be applied, scaffolds must have the characteristics such as the excellent biocompatibility, biodegradability, minimum immunity and inflammation, proper mechanical strength and interaction between the material and the cells.ResultsThe world stem cell market was approximately 2.715 billion dollars in 2010, and with a growth rate of 16.8% annually, a market of 6.877 billion dollars will be formed in 2016. From 2017, the expected annual growth rate is 10.6%, which would expand the market to 11.38 billion dollars by 2021. Meanwhile, the world scaffold element technology market was approximately 4.57 million dollars in 2013, and by increasing 13.4% annually, it is estimated to expand to 10.63 million dollars by 2020. The Korean scaffold element technology market was about 22 million dollars in 2013, and with a steady growth of approximately 13.4% every year, it is prospected to be about 52 million dollars by 2020.ConclusionsIn comparison to the medical material and medicine sales growth rate, the future scaffold element technology market is judged to be higher in growth possibility.

Scrutinizing the Impact of Privatization of State-Owned Companies on Financial Performance

This study directed to analyze financial performance of state-owned companies comparatively -- prior and after privatization -- to determine the effect of privatization to financial performance of these companies. For this purpose, the required annually financial statements information of 11 such companies considered in the period. Then the information was related to four major financial variables extracted. These are rate of return on equity (ROE), net sales growth (NSG) rate, net profit growth (NPG) rate and the ratio of sales to total assets which considered as dependent variable and privatization over the period was considered as independent variable. Time trend over the time (the years studied) also were considered as independent variable to explore the effect of privatization and time trend separately on dependent variables. In order to examine the effect of privatizing we take advantage of Paired T-Test and regression analysis with indicator variables. The results of the regression analysis with indicator variables revealed that ROE after privatization increased while the rate of NPG with the ratio of sales to total assets decreased and no significant differences observed in the rate of NSG after privatization.

Do Firms with Directorss and Officerss Liability Insurance Perform Better than Firms Without Such Insurance?

We examine the relationship between existence of D&O insurance and firm performance measured by Tobin’s Q. Using a sample of 5,752 Taiwanese firm-year observations over the 2008 to 2012 period, we find a positive correlation between firm performance and existence of D&O insurance. Tobin’s Q of firms with the D&O insurance is over 10 percent greater than that of firms without the insurance. But such a positive association is spurious. After controlling for other factors that may affect firm performance such as ownership structure, board structure, financial leverage, firm profitability, R&D expense ratio, sales growth rates and firm size, the OLS results show that D&O insurance either does not affect or only weakly affects firm performance positively. Furthermore, after controlling for the endogeneity of the decision to buy the D&O insurance, all the coefficients of D&O insurance become insignificantly negative. The results suggest that whether to purchase D&O insurance is an endogenous corporate behavior. Our overall result is that existence of D&O insurance does not help improve firm performance. In addition, we find that firms with higher cash ratio, larger and more independent board are more likely to purchase the D&O insurance, while older firms are less likely to buy the D&O insurance.