Increase Shareholder Wealth Research Articles

Measuring Shareholder Wealth in Light of Creative Accounting Practices

The aim of the research is to shed light on shareholder wealth and explain its definition and the role of management in increasing shareholder wealth and indicators. To achieve the aim of the research, the economic units listed on the Iraqi Securities Market, which completed their final accounts and totaled (138), were selected as a group for research with the identification of (9) expenses and a single hotel. of Iraqi hotels and (5) companies listed on the Iraqi Stock Exchange as a sample for research, and the researchers came to a group of conclusions, the most important of which is that shareholder wealth is the value that shareholders receive as a result of their investment in the company's shares and is measured through the increase in the market value of the shares that they own it and what profits they receive, and the researchers presented a set of recommendations, the most important of which was investors' depend in modern performance measures based on market value added and economic value added because these measures have the ability to measure the real impact of economic performance on wealth.

The Influence of Economic Value Added (EVA), Market Value Added (MVA) And Company Value On Stock Prices PT. Bank Panin Dubai Syariah

Share price is an indicator of the success of running a company. When a company's share price rises, investors believe the company is successful in managing its business. If share prices continue to fall, it means the company has not succeeded in increasing its company value. This research aims to determine the influence of each variable Economic Value Added (EVA), Market Value Added (MVA), and Company Value on the share price of PT. Bank Panin Dubai Syariah both partially and simultaneously. This research is quantitative research with a correlational approach (correlation), the research data source is secondary data in the form of financial reports and share prices of the company PT. Bank Panin Dubai Syariah quarter 2014-2021. Data hypothesis testing in this study uses multiple linear regression tests. Data analysis includes classical assumption tests, multiple regression analysis, F tests and T tests. The results of the research reveal that the Economic Value Added (EVA) variable has a significant and negative effect on stock prices, EVA produces value negative, indicating that the company's performance and ability to generate wealth have not been achieved for the company and investors. The Market Value Added (MVA) variable has no significant and negative effect on stock prices. MVA produces a negative value which indicates that the company's main goal of increasing shareholder wealth has not been achieved. Meanwhile, the company value variable (PBV) produces a significant and positive value which indicates the share price is below 1, which means the share price is undervalued or relatively cheap.

Does environmental, social and governance performance affect acquisition premium?

PurposeFrom a target perspective, this paper aims to examine the impact of environmental, social and governance (ESG) performance on mergers and acquisitions (M&A) transaction valuations.Design/methodology/approachThis paper uses a sample of 629 international transactions conducted between 2002 and 2020. Ordinary least squares (OLS) regression was applied by using ESG aggregate score and the three ESG pillars: environment, social and governance.FindingsThis paper finds that the ESG performance of targets has a negative and significant impact on acquisition premiums. However, this paper finds that targets receive lower premiums by increasing their ESG score, suggesting that targets would do better to focus on ESG to increase shareholder wealth. Thus, results of this paper support the view that ESG-focused firms create shareholder value through the M&A process. Furthermore, results of this paper indicate that environmental and social aspects of ESG drive the acquisition premium. The governance score does not seem to be related to acquisition premiums.Originality/valueTo the best of the authors’ knowledge, this study is the first study to assess whether ESG performance impacts the valuation of M&A transactions by decomposing ESG into its three components.

The Determinants of Manufacturer Firm Value in the Indonesia Stock Exchange During Pandemic: Signalling Theory Perspective

The importance of a company's value cannot be overstated as it directly correlates with the prosperity of shareholders. Elevated company value translates to increased shareholder wealth, primarily manifested through higher stock prices. This research endeavors to empirically assess the impact of liquidity, leverage, and profitability – independent variables – on firm value within the food and beverage manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2021. Employing a quantitative approach, secondary data from the official website (www.idx.co.id) was utilized, encompassing companies within this subsector. The research employed purposive sampling, selecting 28 companies from a total population of 84. Statistical Product and Service Solution (SPSS) version 23 facilitated data analysis using multiple linear regression. Findings revealed that liquidity (X1) exhibited a significance value of 0.511, surpassing the 0.05 significance level (0.511 > 0.05), with a negative t value of -0.663. This implies that liquidity (X1) does not exert a significant influence on firm value (Y). Likewise, leverage (X2) yielded a significance value of 0.326, exceeding the 0.05 level (0.326 > 0.05), accompanied by a positive t value of 0.993

Financial Statements and External Users’ Wealth Related to Decision-Making

The corporation's financial statements comply with legislation and regulations. Financial statements provide information that is very essential to interested parties, such as shareholders, creditors, and financial institutions, for decision-making. Throughout the information, the interested parties will decide whether to invest or provide credit to increase their wealth. In addition, financial statements become tools for identifying the financial situation of the business, whether it is good or bad. The financial statements will show a company's ability to provide a better dividend that can increase shareholder wealth. Furthermore, creditors, and financial institutions may provide credit and loans to company if the financial statements show a better profit, which is linked to the capability of the company to settle all debts. Financial statement information can enhance the wealth of shareholders, creditors and financial institutions through improved decision-making.

The Influence of Cash Ownership on Financial Performance: An Examination of Disruptors and Acquirers

Cash ownership emits a powerful positive signal. We examine four sources of cash in firms, i.e., cash flows, cash holdings, cash proceeds from debt, and cash proceeds from equity. We examine the effects of cash ownership for firms growing by disruption, and firms growing by acquisition. Information signaling theory maintains that free cash flows may be used to increase shareholder wealth. Two-stage least squares regressions determined the impact of cash funding on disruptors and size of acquisition in the first stage, and cash-funded disruption or cash-funded acquisition in the second stage, for a US sample of 832 disruptor firms and 924 acquirers, from 2000–2020. Disruptions funded by cash holdings, cash flow, and cash proceeds from debt, significantly increased stock returns. A size effect was observed, with small disruptors showing significant effects. Acquisitions funded by cash holdings, cash flow, and cash proceeds from debt, significantly increased stock returns and return on assets. Agency costs significantly reduced returns and profits. Results for disruptions and acquisitions support signaling theory with free cash flows signaling higher share prices for both disruptors and acquirers, and higher profits for acquirers.

From shareholder to stakeholder engagement: How regular and irregular corporate social responsibility affects CEO compensation

AbstractThe present study aims to uncover the role of regular and irregular CSR in CEO compensation contracts. Taking sample of non‐financial Chinese listed firms from 2010 to 2020, this study employed a panel data regression model. According to traditional agency theory, CSR can increase shareholder wealth. This theory is not supported by the actual findings of the study, which indicate a negative relationship between CSR and CEO compensation. In further analysis, we disintegrate CSR and finds that regular CSR is positively associated with CEO compensation, showing that CEOs are compensated for maintaining an optimal level of CSR. In contrast, irregular CSR has a negative relationship with CEO compensation, indicating that when CSR investments deviate from their optimal level, they may have a negative impact on shareholders wealth by transferring wealth from shareholder to stakeholder; resulting in a decrease in CEO compensation. We conclude by establishing an inverted U‐shaped relationship between CEO compensation and CSR. The present study's conclusions are supportive and provide vital insights for future research and business operations. Moreover, policymakers can utilize our findings while negotiating CEO compensation contracts.

EXPLORING THE RELATIONSHIP BETWEEN SMEs FINANCING AND ENTREPRENEURS’ PERCEPTIONS ON THE DEVELOPMENT OF THE HOSPITALITY INDUSTRY IN SYLHET

By serving and gratifying clients, the hospitality business has a significant potential to stimulate economic growth and to increase shareholder wealth. The study's primary goal is to examine how SME financing has affected Bangladesh's growing hotel sector. Growth in services and jobs are important SMHE development determinants. The theoretical model displays how the researcher has conceptualized the relationships between the study's variables. We employed factor analysis, test of hypothesis, and descriptive analysis to conduct quantitative analysis for this paper using SPSS. In this work, both primary and secondary data have been utilized. Primary data collection will be done in the Sylhet districts (Sadar) utilizing standardized questionnaires that will concentrate on the borrower's perspective of SME funding. Secondary data was gathered from academic journals, theoretical evaluations of SME foundations, papers, Bangladesh Bank magazine reviews, and BBS reports. A survey will be undertaken to obtain feedback from the owners or managers of various hotels, restaurants, and managed food services in the districts of Sylhet (Sadar). The study found a strong correlation between organizational behavior measures and SME finance. This study also poses the possibility that the Sylhet region's hotel sector could improve its performance through smart SME financing. The study also suggested potential future uses of SME finance in hospitality firms in the Sylhet region. The framework includes the impact of SME financing on revenue, job growth, and their ‘customers.

Stock market response to the statement on the purpose of a corporation: A vindication of stakeholder theory

AbstractResearch Question/IssueOn August 19, 2019, the Business Roundtable (2019) released a statement signed by 181 chief executive officers (CEOs) of well‐known US corporations, in which they pledged “a fundamental commitment” to “deliver value to all” stakeholders. This study examines the stock market reaction to this new statement on the purpose of a corporation.Research Findings/InsightsBased on a sample of 163 publicly listed companies that signed the pledge, the results show that investors react positively to a firm's pledge in the days surrounding the statement release. The consensus among stock market investors was robust, characterized by the low volatility in the share price post‐announcement date. The decision by these companies, though intended to maximize the wealth of all stakeholders, rather than shareholders alone, carries an opportunity cost. Specifically, a post‐announcement decline in share buybacks by pledge firms relative to control firms is observed, though investors embracing stakeholder theory appear undeterred by the reduction in distributions.Theoretical/Academic ImplicationsThis study provides empirical support that, in the evolving business environment, companies must emphasize issues that concern customers, employees, non‐governmental organizations (NGOs), and the government. Failure to prioritize these issues may engender public backlash, especially in the age of social media. However, the attention to stakeholders is compatible with the focus on shareholder performance. Performance suffers when customers leave, workers feel dissatisfied, NGOs call for boycotts, and governments levy fines. Corporations seeking to increase shareholder wealth will need to fully embrace stakeholder concerns.Practitioner/Policy ImplicationsThis study shows that adopting a stakeholder perspective unlocked value that would not have been achieved had the focus remained on shareholder primacy. The excess values may derive from greater customer loyalty, improved employee motivation, better supplier relations, supportive financiers, maximizing revenue, minimizing costs, and/or yielding higher profits. Shareholders anticipate greater long‐term value from companies emphasizing employees, communities, supply chain, financiers, and shareholders.

Shareholder Value Creation through Corporate Spin-Offs in Europe—An Empirical Analysis

Through a spin-off of a business unit, the parent company aims to have a positive impact on its enterprise value. The parent company often pursues the spin-off transaction to strengthen the focus on its core business, reduce negative synergies and increase operational efficiency. Based on studies already established in the literature, it is assumed that the spin-off transaction increases shareholder wealth. Despite the high relevance of spin-offs as restructuring measure, empirical research in Europe has not sufficiently addressed this issue yet. Accordingly, this paper examines both the short-term effects of a spin-off announcement for the parent company and the long-term effects of the implementation of the spin-off at the level of the parent company and the spin-off company on the European capital market. A sample of 24 European companies is examined. The time horizon of the empirical research is from January 2015 to December 2020. For the short-term study, five event windows were chosen around the announcement date and for the long-term study, 3 event periods were chosen over 3, 6 and 12 months after the spin-off transaction. The short-term examination of parent companies yields a cumulative average abnormal return over the investigated event windows around the announcement date of 3.40%. In the long-term research, the parent company generates a buy-and-hold average abnormal return over the studied event periods after the implementation of the spin-off transaction of ?4.11%. The spin-off companies generate a buy-and-hold average abnormal return of 13.76% in the same event periods.

IMPACT OF DIVIDEND POLICY ON SHAREHOLDER WEALTH: A CASE OF TOP PERFORMING COMPANIES OF PSX

This is a quantitative research conducted out to find the Shareholder value maximization. What are the factors that contribute to increase the shareholder wealth, their satisfaction and intentions to invest in a particular share? To study this further we analyzed the impact of dividend policy on shareholder wealth, considering the dividend policy as the most important factor in increasing shareholder wealth. To study this relationship the top performing companies of Pakistan Stock Exchange were chosen in our sample that PSX announces every year. The independent variable were Dividend per share, Retained earnings per share, Return on equity and Lagged market price per share. Whereas the dependent variable, to measure the shareholder wealth is Market price per share. To analyze the relationship, the correlation and regression analysis were applied on E-views. After the analysis a positive relation is found between the independent and dependent variables and the overall variables with the model are found to be statistically significant. In doing this research an intensive amount of literature has been reviewed that helped in further explanation of theories and the variable analyzed in this research. Keywords: Dividends per share, retained earnings per share, return on equity, market price per share and lagged market price per share

How Good Corporate Governance, Firm Size, and Dividend Policy Affect Firm Value? Evidence on 100 Non-Financial Companies in Asia

The purpose of this study was to determine the effect of Good Corporate Governance (GCG), firm size, and dividend policy on firm value in 100 non-financial companies in Asia that are included in the Forbes version of The World's Biggest Public Company in 2017-2020. The independent variables used in this study are Good Corporate Governance (GCG) (number of the board of directors and audit committee), Firm Size (total assets), and dividend policy (Dividend Payout Ratio). The dependent variable used in this study is firm value (Tobins'Q). The source of data used in this study is secondary data sourced from annual reports and company financial statements for the 2017-2020 period. The sampling method used purposive sampling technique. The model used in this study is the Random Effect Model (REM). The results obtained are that the variables of the board of directors, audit committee, and firm size have no effect on firm value, while the dividend policy variable has a positive effect on firm value. This results are in line with agency theory which requires company managers to think of the best solution to increase shareholder wealth

Gender Mainstreaming on the Boards of Directors of Banks: Its impact on Bank Performance

Abstract: Gender mainstreaming is an approach to achieve gender equality. It entails incorporating a gender viewpoint into the development, planning, implementation, monitoring, and assessment of policies, regulatory measures, and expenditure plans. While promoting gender equality mainstreaming, alliances between men and women, results in good return which encourages inclusive growth. Corporate governance regulations all over the world encourage the inclusion of women on corporate boards. In 2013, it became mandatory for a company's board of directors to include at least one female director. Board directors play a vital role in any organisation. The primary responsibility of board directors is to increase shareholder wealth. Because of the opacity in banks, the position of board directors is crucial. Their role isn't just to make policies; it also includes putting forth efforts to ensure banking's longterm viability. A well-functioning banking system is regarded as a prerequisite for growth. An attempt is made to investigate the role of female directors in Indian banking, using return on assets and return on equity as performance measures. The panel data is used to examine five public banks and five private banks listed on the BSE. Research articles on the role of gender diversity in the board of directors in affecting bank performance have been collected from several refereed journals to review the related literature. Keywords: Banking, Gender, Director, Performance, Woman

Impact of credit, liquidity, and systematic risk on financial structure: comparative investigation from sustainable production.

The role of risk assessment and capital structure is vital for the sustainable growth of firms and increasing the shareholders' wealth. This research explores the correlation between firm risk and capital structure using datasets from the sugar and cement sectors of Pakistan as a developing economy. This study is unique as it involved two firms of different nature (sugar firms operate seasonally while cement firms operate yearly) to view the real picture on the impact of risk and structure assessment on firms' credibility and shareholders' wealth. For this purpose, 15-year data (2000-2014) containing the financial statements of the target sectors were collected and the ANOVA analysis was applied with credit risk, liquidity risk, systematic risk, and firm size were used as the regressor variables, firm growth and dividend payout ratio as the control variables, and leverage as the regression variable. The findings showed that credit risk and liquidity risk are significantly correlated with leverage. This suggests that decision-makers pertaining to firms' risk and efficiency must focus more on risk to pursue a stronger and sustainable increase in shareholder wealth.

Opportunities and Challenges of Public Finance Management in Sierra Leone

The public sector of the economy, as a rule, established itself as a leading choice in the economy of Sierra Leone. The effective functioning of this sector depends on qualified management, to make management decisions with respect to such organizations.
 
 It should be noted that the most modern management technologies in the field of finance developed and proved to be successful in practice for commercial organizations. Commercial organizations are aimed at profit and welfare of its shareholders. These goals are easily measurable and formalized in enough indicators showing the achievement of the organization's business objectives.
 
 The entities of the public sector are significantly different from commercial organizations. The purpose of entity of public sector is to provide public goods, such as services in the field of law enforcement, health, education and others, rather than increasing shareholder wealth. The economic effect of such services is difficult to measure. The effect of the provision of those services cannot be measured by referring to the cost benefits, because the benefits of such services are impossible to calculate in monetary terms. For example, benefits from the provision of health services, is to increase the public health of the nation. The complexity in measuring of the effectiveness of public sector entities requires the
 use of appropriate tools by management in the field of public finance management.

The Impact of Institutional Investors’ Ownership on Performance and Financial Position: Evidence from Firms in the Republic of Croatia

Abstract The research problem of this study is focused on examining the impact of the ownership of institutional investors on the corporate governance of Croatian companies. The problem was approached comprehensively such that institutional investors were analysed as both homogeneous and heterogeneous groups (investment funds, pension funds, insurance companies). The results of this study reveal a statistically significant impact of institutional investor ownership being viewed as both homogeneous and heterogeneous groups on business performance and financial position, which reduces the gap between ownership intentions and management interests, thereby resulting in an increase in shareholder wealth while limiting the satisfaction and social goals of a company.

Market reaction to the expected loss model in banks

We investigate how investors perceive the adoption of the expected-loss model (ELM) for impairment incorporated in IFRS 9. Using a sample of European listed banks covering the period of the standard-setting process of IFRS 9, we examine whether the market perceives the new regulation to increase shareholder wealth. First, we document a positive market reaction to the ELM adoption events. Second, we find that investors perceive that the potential benefits of ELM are more pronounced for larger banks, banks with lower profitability and higher systemic risk, and for those that received a public bailout and with more positively skewed returns. Overall, these results support a “monitoring” channel suggesting that ELM may lead to greater bank transparency and more effective market discipline, fundamental for improving financial stability.

Wealth Creation in the US Public Stock Markets 1926–2019

This report quantifies long-run stock market outcomes in terms of the increases or decreases (relative to a T-bill benchmark) in shareholder wealth, when considering the full history of both net cash distributions and capital appreciation. The study includes all of the 26,168 firms with publicly traded US common stock since 1926. Although investments in the majority (57.8%) of stocks led to reduced rather than increased shareholder wealth, US stock market investments increased shareholder wealth on net by $47.4 trillion between 1926 and 2019. Technology firms accounted for the largest share—$9.0 trillion—of the total, but telecommunications, energy, and healthcare/pharmaceutical stocks created wealth disproportionate to the numbers of firms in the industries. The degree to which stock market wealth creation is concentrated in a few top-performing firms has increased over time and was particularly strong during the most recent 3 years, when five firms accounted for 22% of net wealth creation. These results should be of interest to any long-term investor assessing the relative merits of broad diversification versus narrow portfolio selection. <b>TOPICS:</b>Security analysis and valuation, performance measurement, wealth management, portfolio construction <b>Key Findings</b> ▪ Shareholders who took on the risk of investing in the public US stock markets between 1926 and 2019 were rewarded by an aggregate wealth increase of more than $47 trillion, as compared with a T-bill benchmark. ▪ The majority of individual stock investments led to decreased rather than increased wealth in the long run. Aggregate shareholder wealth creation is concentrated in a relatively few high-performing stocks. ▪ The degree to which stock market wealth creation is concentrated in a few firms has increased over time, and it was particularly strong during the most recent 3 years.

Keeping up with the Joneses and the real effects of S&amp;amp;P 500 inclusion

Firms added to the S&P 500 index join a prestigious and exclusive club. They want to fit in the club, which creates a “keeping up with the Joneses” effect. Firms pay more attention to their index peers after inclusion and their investment, external financing, and payouts comove more with their index peers. These effects do not appear to result from the increased coordination among investors posited by the common ownership literature as inclusion does not cause a decrease in competition. Since index inclusion does not increase shareholder wealth permanently, these peer effects do not appear to benefit shareholders.

Spin-Offs and Their Impact on Shareholder Wealth: An Empirical Analysis on the German Capital Market

A parent company occasionally spin-off a subsidiary or a business unit if this helps to focus on the core business, eliminate a poor performer or reduce negative synergies in order to improve operational efficiency. Achieving a more efficient valuation on the capital market can also be a motive for a spin-off. The assumption is thus that spin-offs increase shareholder wealth. Despite the high relevance of spin-offs as a restructuring measure, empirical research has not yet sufficiently addressed this topic. The reasons for this are, on the one hand, the lack of topicality of publications and, on the other hand, the lack of consideration of the value effects of spin-offs in the European and, in particular, the German economic area. Accordingly, there is currently no adequate literature covering spin-offs in Germany. As a result, this paper addresses this problem by conducting an analysis of spin-offs in Germany. Consequently, this paper examines wealth effects for a sample of 8 spin-offs from Germany announced between January 2010 and February 2021. The cumulative average abnormal return over the three-day event window [1; +1] is 4.91%.