Higher Firm Value Research Articles

<span>Academic Directors: Innovation Advocates in the Boardroom</span>

We show that academic directors significantly increase firms’ R&D investment and innovation outputs. Following an academic director’s death and relative to a non-academic director’s death, the average firm reduces R&D by 2.0% of total assets and its market value of innovations declines by 4.4%. The results are not driven by PhD CEOs or non-academic PhD directors. Consistent with an advising channel, academic directors in STEM disciplines are particularly pro-innovation. Firms with academic directors are more likely to dismiss the CEOs if they spend less in R&D, suggesting a monitoring channel at work as well. Academic directors are associated with higher firm value at firms where innovation is more important but not at other firms. Overall, our results highlight the vital advising and monitoring roles academic directors play in corporate innovation.

Accounting for Employment Impact at Scale

Using new data on workforce composition and wages, we systematically measure the employment impact at U.S. firms from 2008 to 2020, including 2,518 unique firms and 20,764 firm year observations. We document significant variation across industries and firms within each industry suggesting significant heterogeneity of firm human capital strategies. Employment impact is associated with lower employee turnover, higher firm valuation, and higher risk-return parameters. Our results collectively demonstrate the feasibility and value of employment impact accounting.

DO INTELLECTUAL CAPITAL AND INTANGIBLE ASSETS INFLUENCE THE FIRM VALUE? (CASE STUDY IN TRADE, SERVICE, AND INVESTMENT SECTOR IN INDONESIA)

The objective of this research is to examine the influence of intellectual capital and intangible assets toward firm value. The use of intellectual capital and intangible assets in this research is very interesting because they represent the similar idea, the ability to generate future benefit. However, intellectual capital is not represented in the presentation of financial statement directly, while the intangible asset is presented in the financial statement. The samples are taken from the trade, service, and investment companies classification which are listed in Indonesia Stock Exchange in from 2015 until 2018. Using the purposive sampling, there are 27 companies put as data for the multiple linear regression. The result of the research shows intellectual capital has positive significant relationship toward firm value, meanwhileintangible assets have negative significant relationship toward firm value. It means the lower intangible assets, the higher firm value is. This might be happened if the company cannot utilize the intangible asset optimally.

Working Hard for Long-Distance Relationships: Geographic Proximity and Relationship-Specific Investments

Suppliers that are farther away from their customers make more relationship-specific investments (RSI). This association is more pronounced when it is less costly for the customer to switch to alternative suppliers and when the supplier operates in relatively opaque information environments. Using the introduction of new airline routes as an exogenous shock to the distance between supply chain partners, we show that the relation between supplier RSI and distance may be causal. We also provide evidence that suppliers with larger RSI are better able to maintain long-distance business relationships and are associated with higher firm value. These findings suggest an important dimension of supplier commitment: Suppliers use RSI as a signal of their willingness to fulfill on-going implicit claims.

Influence of rootstocks on fruit physical and chemical properties of peach cv. UFSun.

The subtropical peach cultivar UFSun grafted on five different rootstocks ('Flordaguard', 'Barton', 'MP‐29', 'P‐22', and 'Okinawa') was investigated in terms of the pomological and biochemical parameters of the fruit. Significant differences in fruit weight and size, soluble solids content, titratable acidity, and firmness were found among some rootstocks. The fruit length and diameter were different between the 'MP‐29' and other rootstocks. It was also found that firmness of 'UFSun' fruit was affected by the rootstock. The highest firmness value was found when 'UFSun' was grafted on 'Flordaguard'.' 'MP‐29' fruit had the highest soluble solids content, but there were no differences among the other rootstocks. 'UFSun' fruit from trees grafted on 'MP‐29' were smaller and had the most intense color compared to 'UFSun' fruit from other rootstocks. Rootstock had a significant influence on total fruit phenolic compounds, anthocyanin content, and total antioxidant activity, with fruit from 'UFSun' on 'MP‐29' having the highest values in all of them. A high correlation between fruit total antioxidant activity and total phenolic content was found. Overall, the results showed that 'MP‐29' seems to induce the highest fruit quality, showing higher contents of total soluble solids, total titratable acidity, total phenolic compounds, total antioxidant activity, and total anthocyanin content. Selecting the right combination of the rootstock and cultivar is important for optimizing fruit quality parameters.

The Effects of 1-Methylcyclopropene Treatment on the Fruit Quality of ‘Idared’ Apples during Storage and Transportation

1-Methylcyclopropene (1-MCP) is applied as an inhibitor of ethylene action, which is widely used in postharvest technology to prolong the shelf life of many fruits. The aim of the study was to assess the possibility to apply 1-MCP treatment to maintain the quality of ‘Idared’ apples for long-distance transportation. The studied apples were assessed in three groups: (I) 1-MCP postharvest treatment; (II) 1-MCP postharvest treatment with Modified Atmosphere Packaging (MAP) selected gas permeability bags; and (III) control groups (with neither 1-MCP treatment, nor dedicated packaging). Apples were subjected to storage in the Ultra Low Oxygen (ULO) chamber that was applied for 0 weeks, 10 weeks and 20 weeks (three periods of storage); simulated long-distance transport (6 weeks); and simulated distribution, which was applied for 0 days, 5 days, 10 days, and 15 days (4 periods of distribution). The obtained 36 groups (three postharvest treatments per three periods of storage per four periods of distribution) were analyzed to assess firmness, total soluble solids (TSS) and titratable acidity (TA). There were differences between firmness values for control groups and those with 1-MCP applied, which were characterized by higher values of firmness (p < 0.05). Groups with 1-MCP and MAP applied combined were characterized by higher values of TSS than control groups (p < 0.05). The majority of groups with 1-MCP applied alone were characterized by higher values of TA than control groups (p < 0.05), but values for samples attributed to 1-MCP and MAP combined were not higher than for 1-MCP alone. It may be concluded that 1-MCP applied postharvest contributed to higher results of firmness and TA of ‘Idared’ apples after long-distance transportation, but combining 1-MCP with MAP did not contribute to further differences for TA. However, for TSS the observed influence was inconclusive. It may be stated that 1-MCP is a beneficial treatment for ‘Idared’ apples for long-distance transportation as it prolongs their shelf life and improves firmness.

CEOs’ Prosocial Behavior, Their Careers and Corporate Policies

This paper examines the associations of Chief Executive Officers’ (CEOs’) prosocial behavior with their career paths and corporate policies. Using individuals’ involvement with charitable organizations as a proxy for prosocial behavior, we find that prosocial individuals are promoted to CEOs faster than non-prosocial individuals. In addition, compared to firms with non-prosocial CEOs, firms with prosocial CEOs tend to have lower executive subordinate turnover, implement more employee-friendly policies, experience higher customer satisfaction, and engage in more socially responsible activities. We also find that firms with prosocial CEOs have higher firm value. These results are corroborated when we compare changes in corporate policies and firm value around different types of CEO turnovers: a prosocial CEO replacing a non-prosocial CEO versus other types of CEO turnovers. Our results thus suggest that prosocial CEOs are more likely to make corporate decisions that benefit a wide range of firm stakeholders.

Do Analysts’ Cash Flow Forecasts Improve Firm Value?

We examine whether analysts’ cash flow forecasts improve firm value. First, we analyze whether the joint issuance of financial analysts’ earnings and cash flow forecasts improve firm value. Second, we analyze whether the quality of analysts’ cash flow forecasts improve firm value. The empirical results of our study are as follows. First, the joint issuance of analysts’ earnings and cash flow forecasts has a significantly positive effect on firm value; providing cash flow forecasts reduces information asymmetry and increases earnings quality, thereby increasing corporate value. Second, the quality of analysts’ cash flow forecasts has a significantly positive effect on firm value; the more accurate cash flow forecasts are, the higher firm value is. Our study provides empirical evidence for that the conclusion that cash flow forecasting information produced by financial analysts provides useful information for capital market participants in economic decision making.

Does external uncertainty matter in corporate sustainability performance?

Motivated by the prevalence of corporate sustainability and the rise of uncertainty at the national level, we investigate the impact of three sources of uncertainty; namely, economic policy, climate change, and political instability, on firms' sustainability performance. Using a sample of 6804 firms from 72 countries spanning 15 years, our study revealed that uncertainty due to climate change, economic policy, and political instability negatively affects firms' sustainability performance. This finding is in line with the real options theory that uncertainty in an external environment discourages firms' long-term investment (e.g. investment in corporate sustainability). In addition, the results show that the option for delay in sustainability investment moderated the relation between uncertainty at the national level and firms' sustainability performance. Firms with better sustainability performance had higher firm value when facing uncertainty. Interestingly, firms with higher profitability performed better in sustainability when facing uncertainty at the national level.

Influences of chitosan coatings on functional compounds of sweet cherries.

In this study, sweet cherries were coated with four chitosans (1%) [two of them produced from shrimp waste from Marmara Sea in Turkey (Chitosan-1, Chitosan-2) and two of them commercially produced (Commercial-1 and Commercial-2)] which have different deacetylation degree, and molecular weight (Chitosan-1, deacetylation degree: 78.20%, molecular weight: 182kDa; Chitosan-2, deacetylation degree: 84.95%, molecular weight: 127kDa; Commercial-1, deacetylation degree: 81.22%, molecular weight: 273kDa; Commercial-2, deacetylation degree: 75.12%, molecular weight: 407kDa) and stored at 4°C for 25days, and 20°C for 15days. Changes in the total phenolic content, antioxidant capacity, total anthocyanin content, ascorbic acid, total pectin content, firmness, and colour values were evaluated. The results revealed that Chitosan-1 had the highest firmness value; Chitosan-2 showed the highest total anthocyanin and total phenolic content and Commercial-1 exhibited the highest antioxidant capacity and ascorbic acid content at 4°C. Furthermore, it was found that Chitosan-1 demonstrated the highest total phenolic content; Chitosan-2 displayed the highest total anthocyanin; Commercial-1 had the highest firmness value and C-2 exhibited the highest ascorbic acid content at 20°C. In conclusion, each tested chitosan coatings have different effects on different quality attributes at different storage temperatures.

On-balance-sheet duration hedging and firm value

In this study we consider the determinants and effects of on-balance-sheet duration hedging for non-financial US firms. The difference between the duration of assets and liabilities, or duration gap, is negatively related to growth opportunities, and positively related to profitability, corporate cash holdings, and managerial ownership. We find that both a lower duration gap and a lower absolute value of duration gap are associated with higher firm values. Moreover, we find some evidence that firms with larger duration gaps performed worse during the market-wide liquidity shock accompanying the Lehman Brothers bankruptcy.

Financial derivatives and firm value: What have we learned?

Despite an enormous amount of research on the relationship between financial hedging and firm performance, the literature provides so far no clear-cut findings on whether the use of derivatives results in higher firm valuation. Using a meta-analysis of 51 studies, this research explains whether the absence of a consensus is due to different country specificities and hedging types. The findings show that the use of foreign currency derivatives, alone or along with other types of derivatives, drives firm value positively. They also show that hedging presents an economic advantage for all firms, especially those from common law and developed countries.

Stock name length and high visibility premium

High stock visibility reduces the cost of capital and creates high firm value. In China's A-share market, only 427 stocks have a three-character name, while almost 3000 stocks have four-character names; we use posts read and reply at BBS to verify the high visibility of former. We then use stock name length as the measure of stock visibility and examine abnormally high returns of stocks with high visibility. We find that the premiums of three-character length name stocks exist after controlling for systematic risks, and that premiums could decrease when the information environment for stocks improves.

Does Board Independence Increase Firm Value? Evidence from Closed-End Funds

AbstractResearchers disagree about the impact of board independence on firm value. The disagreement generally stems from the endogenous nature of board appointments. I add new evidence to this discussion by using a sample of closed-end funds to document the value-enhancing effects of independent boards. Using cross-sectional, difference-in-differences, and instrumental variables techniques, I address these endogeneity concerns and find consistent evidence that board independence is associated with higher firm value.

Capturing the impact of nanobubble liquid in enhancing the physical quality of ice cream

Nanobubbles are bubbles of nanometer to micrometer size and are dispersed in a liquid water. In recent years, nanobubbles technology has been used in an extensive range of application such as in drinking water, agriculture, fishery, wastewater treatment and food. In ice cream, air cells are important for the smooth texture of ice cream. In this study, the effects of using nanobubble liquid in ice cream was compared with the one using normal water. Samples were prepared and analysis was conducted to check the physical properties of ice cream. Based on the results obtained, the apparent viscosity of ice cream made using nanobubble liquid (INBL) and normal water (INW) were 0.211 Pa.s and 0.149 Pa.s, respectively. INBL ice cream had higher density and firmness which were 0.77 g/mL and 34.80 gram-force, respectively while INM ice cream had slightly lower density and firmness which were 0.74 g/mL and 29.93 gram-force, respectively. The overrun of INBL ice cream was lower which was 46 % while INW ice cream was 54 %. For both INW and INBL ice creams, the fastest melting rate was recorded between 10-30 min at the rate of 1.491 g/min and 1.558 g/min, respectively. INBL ice cream held its body slightly longer and melted a bit later than INW ice cream. As a conclusion, ice cream with lower overrun is denser and has rich texture. Smaller air bubbles are able to hold the ice cream body better than the ones with larger air bubbles. Nanobubble liquid ice cream has higher firmness value which indicates its ability to better retain its shape.

Wealth effects of relative firm value in M&A deals: reallocation of physical versus intangible assets

This paper distinguishes between value creation through redistribution of physical assets and that from intangible assets. We decompose the market-to-book ratio into fundamental value and unexplained components and find that mergers create wealth when high-value firms primarily acquire physical assets from low-value firms. In contrast, deals motivated by transfer of investment opportunities generate wealth when growth-constrained low-value firms acquire substantial intangible assets from high-value targets. By separating the two motives for mergers, we provide empirical evidence of two diametrically opposed effects of relative firm value on wealth gains to shareholders, thus reconciling the conflicting evidence of the ‘high-buys-low’ effect from earlier studies. Concomitantly, our findings also explain the patterns of firm pairings in merger data that run contrary to conventional wisdom. Our empirical framework considers the effects of mispricing, governance, and size of assets reallocated and addresses concerns of selection bias. Additionally, we find evidence of post-merger wealth generation through the acquisition of growth opportunities in the form of intangible asset transfer from a high-value target to a low-value acquirer.

The impact of government ownership on the cost of debt and valuation of Vietnamese listed companies

PurposeThis paper aims to examine the impact of government ownership on the cost of debt and firm valuation in listed Vietnamese companies for the period 2007 to 2016.Design/methodology/approachThe authors use both the generalised methods of the moment (GMM) and the ordinary least squares (OLS) regressions to analyse a panel data spanning over the period 2007 to 2016 in the markets of Vietnam. Further, the instrumental variable is used in the paper.FindingsThe authors find that firms with relative higher government stockholdings or state-owned companies where the government owns 50 per cent or more of shares outstanding enjoy a lower cost of debt compared to the other firms. Consequently, these firms have higher firm valuation and profitability. The results are robust for both the GMM and the OLS regressions. Further, firms that no longer retain government ownership have a higher cost of debt than the other firms. The results of the paper imply the importance of political connections in businesses in the market of Vietnam.Originality/valueThis paper connects the relationship between government ownership and the cost of debt with the relationship between government ownership and firm valuation. The paper tests the relationship between the cost of debt and government ownership using both OLS and GMM specifications and the results are robust for both approaches. The manuscript uses an instrumental variable to show that government ownership has a positive impact on higher firm performance through reducing cost of debt. Further, this paper addresses the possible issue of endogeneity.

Determinants of Hedging and their Impact on Firm Value and Risk: After Controlling for Endogeneity Using a Two-stage Analysis

Purpose – In this study, we investigate determinants of hedging with derivatives and its effect on firm value and firm risk for Korean firms. Design/methodology – To avoid the endogeneity problem pointed out in previous studies, we use a two-stage analysis by using gains and losses from derivatives as instrument variable for hedging with derivatives. Findings – Our analysis on the determinants of hedging shows that firms that are more leveraged and less profitable, and with more growth opportunities are likely to hedge through derivatives. Additionally, large firms, firms less diversified into industry, and firms more diversified geographically are likely to use derivatives. Our two-stage analysis shows that indicators of hedging with derivatives have an insignificant effect on firm value, and the indicator of futures/forwards use and of swaps use have significant negative effect on firm value. Whereas, the extent of hedging with derivatives has positive effect on firm value for all types of foreign currency derivatives, which suggests that moderately low hedgers use derivatives inefficiently, but extensive hedgers use derivatives properly. With regard to firm risk, hedging with derivatives increases market-based risk, but decreases accounting-based risk. Thus, we conclude that Korean firms use derivatives to manage operational volatility rather than to manage market risk, and accounting-based risk reduction through hedging is not directly translated into higher firm value. Originality/value – This is not the first study to investigate hedging behavior of Korean firms, but the sample period that that this study analyzed is the longest and various method are used to control the endogeneity problem. We investigate not only total foreign currency derivatives but also by types of derivatives, including futures/forwards, options, and swaps.

Financial industry lobbying and shareholder litigation outcomes: implications for managers and regulators

We examine the relationship between financial firm corporate lobbying, shareholder-based litigation outcomes, and firm value. We show that political lobbying lowers federal class action securities litigation likelihood for public financial institutions. Secondly, lobbying firms experience a higher likelihood of having litigation dismissed, and the average settlement amount is significantly lower for lobbying institutions. In addition, shortly after a litigation announcement, lobbying firms experience significantly higher cumulative abnormal returns (CARs), compared to non-lobbying firms. Finally, we show that lobbying firms have higher long-run buy-and-hold abnormal stock returns (BHARs) following lobbying activities. Our results link financial institution lobbying activity with improved legal outcomes and relatively higher firm value. While lobbying improves financial firm value, our results also imply that lobbying creates a disadvantage for non-lobbying firms within the industry. Our results provide insights, not only to corporate managers, but to regulators and policymakers interested in the impact of lobbying on the efficacy and objectivity of regulation and enforcement in the financial services industry.

DETERMINATION OF THE QUALITY CHARACTERISTICS OF NATURALLY GROWING HAWTHORN IN SUŞEHRI

The study was conducted in 2017 in the district of Sivas. In the study, 20 genotypes, which are considered to be different from each other, taking into account the fruit characteristics such as color and size and shape, were determined from the hawthorns that were naturally grown in the flora of Suşheri. At harvest time, the fruit, which would be adequate for pomological and biochemical measurements and analyzes, was harvested. According to the results of the measurements and analyzes in the study, fruit weight was found to vary between 0.68 g and 6.35 g, fruit width was between 10.52 and 29.48 mm and fruit length was between 11.40 and 20.67 mm. The highest firmness values were recorded with the genotype (G) 20 genotype, while the G4 had the lowest values in terms of the firmness values of the fruit flesh. While there are no significant differences between the pH values of the genotypes, the differences between the genotypes in terms of SSC, TA and vitamin C contents are quite significant. It has been found that there are significant differences between the genotypes in terms of total phenolic, total flavonoid and antioxidant activity. The total phenolic content ranged from 218.8 (G17) to 605.8 (G5 and G8) mg GAE kg–1 f.w., while the lowest total flavonoid content was 21.58 (G 17) and the highest total flavonoid content was 67.75 (G9) mg GAE kg–1 f.w. When the antioxidant activity was evaluated, the DPPH values were 1.08 (G17) – 15.43 (14) mmol TE kg–1 f.w., the FRAP values were 15.43 (G16) – 47.23 (G8) mmol TE kg–1 f.w. respectively.