Higher Firm Value Research Articles

The Effect of Leverage, Corporate Governance, and Profitability on Firm Value

This research analyzes the influence of debt on firm value with corporate governance as a variable presumed to moderate the relationship between debt and firm value. The research sample was selected using a purposive sampling method, resulting in 44 non-cyclical consumer sector companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022. The study results indicate that corporate governance and profitability positively affect firm value, and firm size affects firm value. Corporate governance as a moderating variable can negatively moderate the relationship between debt and firm value. The findings of this study provide insights into institutional ownership, profitability, and firm size that affect firm value. Investors can use this information to conduct risk analysis and inform their investment decisions. Investors should choose companies with strong corporate governance and high profitability, considering institutional ownership in the corporate governance variable. Investors should preferably select companies with high institutional ownership and high profitability to ensure high firm value but choose companies with smaller sizes where the company uses total assets productively.

Do Non‐SOEs Engage in Less Tax Avoidance When the Government Is a Minority Shareholder in China?

This study attempts to shed new light on how the state, as a minority shareholder, can affect the tax planning of non‐state‐owned enterprises (non‐SOEs). We examine publicly traded non‐SOEs in China and find that non‐SOEs engage in more tax avoidance when the government is a minority shareholder, indicating that minority state ownership has had a ‘shelter effect’ on tax avoidance of non‐SOEs. Further analysis shows that the sheltering effect of minority state ownership is more prominent for firms located in areas with heavier social burdens, worse tax enforcement and firms with stronger incentives to avoid taxes. Furthermore, non‐SOEs with minority state ownership increase excessive capital expenditures and employ redundant employees but still have higher firm value. Overall, our findings suggest the state, as a minority shareholder, shapes the tax‐planning activities of non‐SOEs in a ‘two‐way favour exchange’ manner and it is beneficial for non‐SOEs to maintain a close relationship with the government in China, where the government controls key resources.

The role of stock liquidity in blockholder governance: Evidence from corporate social responsibility

AbstractWe use decimalization of the tick size, which exogenously increases stock liquidity and thereby heightens blockholder governance, to identify its effect on corporate social responsibility (CSR). We find that enhanced blockholder governance after decimalization leads to lower excessive CSR performance and higher firm value. Compared to active blockholders, passive blockholders, relying on the threat of selling shares and exiting, drive our results. The inverse relationship between blockholder governance and CSR is more pronounced for firms with poor corporate governance prior to decimalization. Our evidence suggests that blockholder exit threat can serve as a governance device to alleviate agency‐driven CSR.

Assessment of Physiological and Qualitative Traits of Cucumber Genotypes under Ambient Conditions

Background: With the advancement of storage period the crispness or firmness of greenhouse cucumber gradually decreased and usually had a shelf life counting from only 3 to 5 days at the ambient conditions. Methods: This experiment was conducted to evaluate the status of quality deterioration during post-harvest handling of different genotypes of greenhouse cucumber under ambient conditions. The basis of evaluation was based on the analysis of several physiological and qualitative traits including, physiological loss in weight (%), firmness (Newton), total soluble solids (°Brix), titratable acidity (%), total chlorophyll and total carotenoid content (mg/100 mg fresh weight). Result: Among cucumber inbred lines, the genotype, BRGCU-4 was observed with minimum moisture loss and highest firmness values, while the BRPCU-8 found to be best in retaining highest TSS and acidity and BRPCU-3 exhibited highest chlorophyll content during the storage period of a week. Moreover, hybrids of BRGCU-4 × BRPCU-6, followed by BRGCU-4 × BRPCU-8 were much better in retaining moistures and firmness, while the BRPCU-3 × BRPCU-6 hybrids recorded for highest chlorophyll andcarotenoid content. Therefore, these genotypes were found to be suitable for transportation, marketing and storage at ambient conditions.

Media Coverage of Corporate Social Irresponsibility and Firm value: The Moderating Role of CSR Contracting

ABSTRACT This study investigates the role of CSR contracting in the relationship between negative media coverage of corporate social irresponsibility (CSiR) and firm value. By analyzing firms from 44 countries spanning the period 2003–2016, we find that media coverage of CSiR motivates firms to employ CSR contracting as a means of restoring their reputation, which in turn, leads to increased levels of CSR engagement and higher firm value. These findings align with theoretical arguments suggesting that CSR contracting can serve as an effective mechanism for improving a firm’s CSR reputation, thus enabling them to remedy damage caused by media coverage of CSiR and boost firm value.

ASSESSMENT OF PRIVATIZED CEMENT INDUSTRY’S PERFORMANCE AND CORPORATE GOVERNANCE IN NIGERIA: AN APPLICATION OF TOBIN’S Q MODEL

The paper investigates the application of Tobin’s Q model in assessing the impact of corporate governance on firm value of cement industry. The variables studied were Tobin’s Q as firm value’s proxy (dependent variable) and corporate governance proxies as independent variables. Data was obtained from the secondary source, and the statistical tools employed in the Methodology were; Performance Trend Analysis and OLS regression. Trend analysis result shows that, post-privatisation has higher firm value. Inferential statistics result suggests that, Average Minority ownership, average percentage of executive directors, average foreign ownership, average board size, average percentage of non-executive directors, average percentage of management staff and average workforce have a positive and significant impact on Cement industry’s performance (Tobin’s q). However, average total market value of shares, institutional ownership and privatisation have negative and significant impact on the Cement industry’s market value while, State ownership has positive and insignificant impact on market value of cement industry. In conclusion, the result of inferential statistics has rejected the null hypothesis that corporate governance does not have significant impact on the performance of Cement industry. Admirably, the result confirmed the findings of the performance trend analysis result. The study recommends that cement industry need to; introduce effectives mechanisms of protecting the overall interest of existing shareholders and potential investors, create a strong corporate governance practice that is value-oriented and ensures economic efficient method of production to maximize earnings per share as well as timely dividend payment, the board of directors should increase the numbers of independent audit committee in order to improve transparency, timely and accurate information flow and prudent financial statement and corporate governance reporting system.

How to Make Long-Term Investments in a Stock Market? A Generic Strategy for Investors

Against the backdrop of increasingly fierce industrial competition nowadays, firms tend to have substantive business risk and/or information risk, increasing the estimation risk and limit of arbitrage for investors in their short-term investments in a stock market. It is thus important for investors to hold a long-term horizon for at least part of their investments in the stock market. This paper aims to introduce a long-term investment strategy that is practically feasible and potentially valuable to investors. To this end, we first develop a parsimonious model in which we identify the major determinants of a firm’s value. This model is used to select high-value firms from each industry for further fundamental analysis and valuation. We next expatiate on how to perform strategy analysis, accounting analysis, financial analysis, and prospective analysis, and therein apply the residual operating income valuation model, in the best possible manner to further value the selected firms and their long-term investment potential. Lastly, we expound the strategy of forming and adjusting a long-term investment portfolio in a way that potentially maximizes long-term portfolio return.

Option trading activity and capital reallocation efficiency: Evidence from corporate restructurings

We examine whether option trading enables firms to restructure more efficiently and thus achieve better economic outcomes. We find that more option trading is associated with greater operating performance and higher firm value in the years following restructuring, after controlling for other determinants of performance and value. The central findings survive the consideration of endogeneity. Our results suggest that option trading produces a feedback effect that allows for a more economically efficient allocation of capital.

Capital market effects of corporate transparency and sustainability: evidence from an emerging economy

PurposeThe study aims to examine the association between corporate transparency and firm value (capital market effect) and investigate whether auditor choice moderates this relationship.Design/methodology/approachThis study uses the Malaysian Institute of Corporate Governance (2017) data set, which provides scores on anti-corruption commitment, organisational transparency and sustainability of Malaysia’s top 100 listed firms. The methodology entails an ordinary pooled least square regression method for empirical research.FindingsThe positive association between corporate transparency and firm value is more evident in anti-corruption and sustainability initiatives. More importantly, government-linked companies have higher scores. Firms with enhanced anti-corruption commitment are more likely to have higher firm value, and this relationship is more evident for politically connected firms. This study also finds that auditor choice is associated with the firm value in the sampled listed firms.Practical implicationsThe findings provide implications for investors and regulators on the role of corporate transparency in an emerging capital market.Social implicationsThe study recommends that emerging market regulators continue enhancing corporate governance codes and practices to improve reporting transparency for listed firms.Originality/valueThis study contributes to the growing literature on sustainability disclosures by incorporating corporate reporting transparency, explicitly relating to firms’ commitment to anti-corruption, organisational transparency and sustainability.

Does Corporate Sustainability Reporting Influence Financial Performance? Evidence from Kenyan Listed Companies

Corporate sustainability reporting is currently a prominent issue in the global business world, with companies worldwide actively publishing sustainability reports to meet the demands of different stakeholders regarding social, environmental, economic, and governance concerns. The existing literature has proved that companies that participate aggressively in corporate sustainability reporting tend to have higher firm value, experience tremendous growth rates in terms of size and profitability, have a high capital and asset base, are lowly geared, and gain a competitive edge in the industry in which they operate. The study examines the link between corporate sustainability reporting and the financial performance of firms listed at the Nairobi Securities Exchange. Corporate governance, social, environmental, and economic pillars were used as indicators of corporate sustainability reporting. The Global Reporting Initiative framework will be employed to establish the corporate sustainability reporting scores and construct the sustainability reporting index. Financial performance was measured by return on assets. The study is anchored on the stakeholder theory supported by legitimacy and the tripled bottom-line theories. The target population comprises sixty-seven companies listed in Kenya. Secondary data was collected from the company integrated reports, published accounts, and the accounts filed with the Nairobi Securities Exchange for the period 2011 to 2020. The study adopted a cross-sectional correlational research design. Descriptive statistical tests carried out include mean, standard deviation, kurtosis and skewness. Correlation analysis was done to test and establish the direction of the relationship between the study variables. Regression analysis was employed to test the hypotheses of the study. Generally, the study findings are that corporate sustainability reporting had a significant positive effect on financial performance. The empirical results of this study showed that corporate sustainability reporting led to improved financial performance among listed companies, although sustainability reporting in Kenya was purely voluntary. Therefore, Kenya’s Capital Markets Authority should consider making corporate sustainability reporting compulsory for all listed companies. Further research can be extended to include non-listed companies and the application of other sustainability reporting frameworks. Keywords: Corporate Sustainability Reporting, Financial Performance, Global Reporting Initiative, Nairobi Securities Exchange.

Pengaruh Kepemilikan Institusional, Profitabilitas, dan Struktur Modal Terhadap Nilai Perusahaan

Firm valuation reflects investors' assessment of a company's performance prospects in relation to its stock price. A higher firm valuation indicates increased prosperity for shareholders and signifies a company's attractiveness to investors. This research aims to conduct a thorough analysis of how institutional ownership, profitability, and capital structure affect the valuation of companies. The research specifically targets businesses within the property and real estate sector that are listed on the Indonesia Stock Exchange from 2017 to 2022. Employing a quantitative approach, the study employs purposive sampling to select a sample of 15 companies, resulting in a total of 90 observations. Data analysis is conducted using panel data regression, facilitated by Eviews 12 software. The research findings reveal that, when considered collectively, institutional ownership, profitability, and capital structure variables jointly contribute to influencing firm valuation. However, the outcomes of individual variable testing indicate that profitability significantly impacts firm valuation, whereas institutional ownership and capital structure do not exhibit a substantial influence on firm valuation.

Block-holder ownership: Moderating the relationship between sustainability disclosure and the value of manufacturing companies in Nigeria

The study uses block-holder ownership as a moderator to investigate the relationship between sustainability disclosure and the value of Nigerian listed manufacturing enterprises via the quantitative research approach. Data was gathered between 2014 and 2021 from the NGX's daily price listings and the companies' annual reports and accounts. The research estimated the impact of industrial fluctuations in company value and uses the linear information valuation model. The results of the findings revealed that social and ethics/integrity disclosures have a negative influence on firm value, whereas economic, environmental, and governance disclosures have a significant beneficial impact. In addition, block-holder ownership has a significant impact on the value of Nigerian listed manufacturing firms. Although there is no statistical evidence to support block- holder ownership moderating the relationship between governance disclosure and firm value, it is evident that it enhances the potential for economic, environmental, social, and ethics/integrity disclosures to influence the value of listed Nigerian manufacturing firms. It implies that prioritizing economic, environmental, and governance disclosures by policymakers and utilizing block-holder ownership in sustainability decisions by practitioners drive the value of the firm, and calls for further theoretical research to investigate the impact of block-holder ownership in moderating the sustainability disclosures and firm value relationship. Thus, the study recommends that regulators should require sustainability disclosure from businesses, promote investor involvement in corporate sustainability decision-making, and increase knowledge of sustainability's advantages and influence on value. In the end, this will improve company value generation and governance, resulting in improved governance and higher firm value.

Development of Topical Formulations Containing 20% of Coated and Uncoated Zinc Oxide Nanoparticles: Stability Assessment and Penetration Evaluation by Reflectance Confocal Laser Microscopy

The introduction of zinc oxide nanoparticles (ZnOn) in sunscreens solved the issue of poor spreadability of these formulations, which often left a white film on the skin. However, safety concerns have arisen regarding the topical application of ZnOn. Some studies employed commercial sunscreens to address the safety issues of the topical application of ZnOn; however, commercial formulations are often complex and contain a wide range of ingredients that could attenuate the potential damage caused by the ZnOn. Therefore, in this study we aimed to develop a simple stable formulation containing 20% of coated and uncoated ZnOn, characterize the formulations and the nanoparticles, and assess the skin penetration in a Franz diffusion cell. The Feret’s diameter for the uncoated and coated ZnOn was 137 nm and 134 nm, respectively. For the uncoated ZnOn the hydrodynamic size in water was 368 nm and for the coated ZnOn, the average hydrodynamic size in ethyl acetate was 135 nm. The incorporation of ZnOn led to formulations more consistent and easier to spread, as suggested by the lower work of shear and higher values of firmness, cohesiveness, consistency and index of viscosity compared with the vehicle. The stability assessment at 45 °C suggested that the formulations containing the ZnOn were stable for 30 days and the vehicle was stable for 90 days. The assessment of the skin penetration by reflectance confocal laser microscopy indicated that the ZnOn did not permeate into the deepest layers of the skin, but accumulated on the skin furrows, hair and hair follicles.

Can military executives overcome difficulties in corporate value creation? ——Evidence from China

We examine whether military executives have the capacity to handle tough circumstances at a time of COVID-19 pandemic. We find that, firms led by military executives experience less likelihood of financial distress and higher firm value during COVID-19 pandemic. The results are robust to alternative measures of main variables and samples, and to ruling out alternative explanations. This effect is more pronounced for firms with top executives that have longer tenure and higher percentage of ownership, and higher percentage of military executives on top management teams. Further, we also find that executives with military experience improve firm value by adopting proactive strategies, such as diversifying by business segment, strengthening online business and improving cost-efficiency. Our finding suggests the important role of executives' personal traits in leading firms overcome adversity in downturns.

CEO overconfidence, risk-taking, and firm value: Influence of incentive compensation and financial constraints

By using the data of firms listed on the three major US stock exchanges—the New York Stock Exchange, Nasdaq Stock Exchange, and American Stock Exchange—this study investigated (1) whether CEO overconfidence increases additional risk-taking and affects firm value, (2) whether high incentive compensation for overconfident CEOs increases additional risk-taking behavior and firm value, and (3) whether financial constraints reduce overconfident CEOs’ additional risk-taking and firm value. Our empirical results reveal significant differences in the variable data between the subsamples of firms with an overconfident CEO versus and those with a non-overconfident CEO. The firms with an overconfident CEO had more additional risk-taking, higher firm value, and more financial constraints than those with a non-overconfident CEO did. CEO overconfidence had significant positive associations with additional risk-taking and firm value, indicating that CEO overconfidence has a positive effect on firm overinvestment. Although overconfidence sometimes distorts investment decisions, it also leads to risky but valuable investments. Offering incentive compensation can incentivize CEOs to engage in additional risk-taking behaviors that increase firm value. This result indicates that offering a greater amount of incentive compensation encourages CEOs to take additional risks because they can gain higher compensation from making valuable investments that increase their firm’s value. In this study, incentive compensation was more likely to motivate risk-taking leading to increase firm value in non-overconfident CEOs than in overconfident CEOs. That is, granting non-overconfident CEOs a high percentage of incentive compensation can align their interests with those of shareholders and encourage more rational risk-taking. Compared with firms with overconfident CEOs, those with non-overconfident CEOs that were subject to higher financial constraints exhibited a less significant decrease in additional risk-taking but a more significant decrease in firm value.

The Effect of Corporate Social Responsibility Expenditure and Board National Diversity on Firm Value with the Availability of Sustainability Report as a Moderation Variable

This study is to provide evidence on the effect of corporate social responsibility expenditure and board national diversity on corporate value. We also test the role of the availability of sustainability reports as a moderating variable on this relationship. Our samples are Indonesian-listed companies on the Indonesia Stock Exchange from 2011 to 2020. Tobin's Q is used to measure firm value. The CSR expenditure is measured by the amount of CSR expenditures reported in the annual report. In contrast, the board’s national diversity is measured by the company’s ratio of foreign board members. The availability of sustainability reports is a dummy variable. The results suggest that CSR expenditure and board diversity do not affect firm value. Moreover, the results indicate that the availability of sustainability reports has a negative moderating effect on the relationship between the ratio of foreign commissioners and firm value, and, on the contrary, has a positive impact on the relationship between the ratio of foreign members of the board of commissioners and firm value. We may imply that companies with a high proportion of foreign member boards of commissioners and provide sustainability reports have higher firm value than companies that do not provide sustainability reports. Our study suffers from some limitations. First, most of our samples do not have foreign commissioners on their board. Second, the Indonesian authority does not strictly regulate the disclosure practices of CSR-related expenditures. Third, future researcher may use another measure of sustainability report, like the quality of the report.

Quality, Nutritional Properties, and Glycemic Index of Colored Whole Wheat Breads.

The main aim of this study was to investigate the quality and nutritional properties (dietary fiber, phenolic, antioxidant contents, and glycemic index) of breads made from whole wheat flours of colored wheats. White (cultivar Agronomicheskaya 5), red (Element 22), purple (EF 22 and Purple 8), and blue (Blue 10) colored wheats were used in the study. The whole wheat flours of Blue 10 and Purple 8 had higher farinograph stability, lower softening degree, and higher quality numbers indicating that they had better rheological properties. Bread produced from whole wheat flour of blue-colored grain had significantly higher loaf volume and better symmetry, crust color, crumb cell structure, and softness values among others (p < 0.05). The whole wheat bread produced using Element 22 had the highest crust and crumb L* color values, while Purple 8 and EF 22 had the lowest crust and crumb L* color values, suggesting that purple-colored grains have a tendency to make whole wheat bread with darker crust and crumb color. Bread produced from cultivar Blue 10 had the lowest firmness values while Element 22 had the highest firmness values. The highest total phenolic content and antioxidant capacity values were obtained from the whole wheat bread sample from purple-colored wheat (Purple 8). The whole wheat flour of Element 22 had the highest total dietary fiber content among all samples (p < 0.05). The differences between whole wheat bread samples in terms of total dietary fiber and glycemic index were not statistically significant. The results of the present study indicated that colored wheats can be used to produce whole wheat breads with higher nutritional properties and acceptable quality characteristics.

BOARD SIZE AND FIRM VALUE IN THE CONTEXT OF MALAYSIA: A CONCEPTUAL FRAMEWORK

This paper presents a conceptual framework between board size and firm value in the context of Malaysia. A comprehensive study of the impact of corporate governance on firm value was conducted. Theoretically, agency theory and resource dependence theory are two frameworks that can be used to analyse the relationship between board size and firm value. Agency theory states that smaller boards of directors are associated with better firm performance and higher firm value because they lead to better decision-making and more effective oversight. Resource dependence theory, on the other hand, suggests that larger boards are able to access external resources, a diverse group of backgrounds, skills, and expertise in specific areas relevant to the company’s operations will increase the value of the firm. Considering the countervailing positive and negative effects of board size on firm value, this paper predicts a non-monotonic relationship between board size and the firm value of listed companies in Malaysia. Therefore, it is important for policymakers to consider the composition and size of the board of directors to ensure effective corporate governance and contribute to the overall success of the company.

Enforcement and disclosure

Absent sufficient enforcement, disclosure regulations are often seen as inconsequential. However, enforcement could have unintended effects on firms' incentives to disclose information voluntarily. We develop a model to analyze the impact of enforcement on firms' mandatory and voluntary disclosure behavior. The model can accommodate different disclosure and enforcement regimes depending on its parameters, ranging from voluntary disclosure under stochastic information endowment to disclosure under an enforcement regime with punitive damages. In the generalized version, low-value firms disclose under a mandatory disclosure rule, medium-value firms do not disclose (some legally, some illegally), and high-value firms disclose voluntarily. Stronger enforcement does indeed increase the number of firms complying with the regulation. However, it also crowds out voluntary disclosure by making separation less attractive, resulting in a decrease in transparency overall. Nevertheless, stronger enforcement does still lead to positive capital market effects, such as lower mispricing. When we endogenize disclosure regulation, i.e., determine the rule according to firms' preferences, there exists a unique standard where no majority prefers a marginal change to the regulation, and that increases in enforcement.

The effects of mandatory ESG disclosure on price discovery efficiency around the world

We examine the effect of mandatory environmental, social and governance (ESG) disclosure on firms' price discovery efficiency around the world. Using data from 45 countries between 2000 and 2020 and a difference-in-differences method, we find that mandatory ESG disclosure increases firm-level stock price non-synchronicity and timeliness of price discovery, suggesting more firm-specific information is incorporated into stock prices in a more timely manner. Mandatory ESG disclosure improves price discovery efficiency more in countries with strong demands for ESG information and in firms with poor disclosure incentives. Mandatory ESG disclosure also leads to other real market changes, such as lower stock returns, greater changes in institutional ownership and higher firm valuation.