Market Value Of Firm Research Articles

Impact of Antitrust Regulations on Firm Market Value: Evidence from Chinese and U.S. Internet Platforms

Impact of Antitrust Regulations on Firm Market Value: Evidence from Chinese and U.S. Internet Platforms

ESG Performance and Firm Market Value of Cash Holdings: Evidence from China

ESG Performance and Firm Market Value of Cash Holdings: Evidence from China

Can Corporate Governance Reforms Increase Firm Market Values? Event Study Evidence from India

Can Corporate Governance Reforms Increase Firm Market Values? Event Study Evidence from India

The Impact of Intangible Assets on Market Value of Firms: Evidence from Pakistan’s Stock Exchange

This study estimates the economic value of intangible assets (IAs) on the market values (MVs) of firms. The IAs play an important role in the future development and success of firms. A firm having more IAs and Research and Development (R&D) expenditures can be more innovative and competitive in the production of goods and service delivery. Therefore, this study finds the impacts of IAs on the MVs by taking a sample of 66 firms listed on Pakistan’s Stock Exchange (PSX) from the period 2007 to 2014. For empirical analysis, the conventional Fixed Effect, Random Effect and Generalized Method of Moment (GMM) models are applied on annual data. The results depict that IAs have increased the MVs of firms in Pakistan. Moreover, leverage ratio and managerial efficiency have also increased the MVs while the expenditures on marketing and advertising have decreased the MVs of firms. This study suggests that firms’ managers can increase investment in the accumulation of IAs for maximization of the MVs. Moreover, the investors and other market participants should also look at the level of IAs before investing in stocks as well as other determinants, especially leverage and managerial efficiency. The value relevance of leverage has also been a worthy policy recommendation for Pakistani firms. So, there is a scope for increasing the debt ratio for the shareholders’ value maximization.

Shareholder Activism and Market Value of Firms: A Moderated Mediation Model of Corporate Social Responsibility Disclosure and Dividend Policy

Firm financial performance has remained a focus for all firms. The findings of various studies on the relationship between shareholder activism and market value, dividend policy and market value and corporate social responsibility disclosure have conflicting results. Some findings show that there is a significant positive relationship. Others show that there is negative relationship. Others posited no relationship. These results are confounding necessitating further research to establish the relationship between Dividend policy and market value. The study objectives included to investigate the relationship between shareholder activism and market value, to determine the mediation effects of dividend policy on the relationship between shareholder activism and market value; and to determine the moderated mediation of corporate social responsibility disclosure on the relationship between shareholder activism and market value. The study adopted panel data design. The sample size was 54 firms listed at Nairobi Security Exchange (NSE). Data was gathered for the period between 2008 – 2017. Results revealed that dividend policy had no significant effect on market value, b1 = 3.6, p>.05; shareholder activism had a positive and significant impact on market value,

Effect of Corporate Assets on Market Value of Oil and Gas Firms in Nigeria

Effect of Corporate Assets on Market Value of Oil and Gas Firms in Nigeria

Chinese Defense Industry Reforms and Military Firm Performance: Evidence from the Civil—Military Integration Strategy

ABSTRACT In March 2015, the Chinese government initiated an important reform program targeting the defense industry, namely civil–military integration (CMI), with the objectives of introducing military technologies to the civilian market and infusing private capital into military enterprises. On examining this unique exogenous shock in a 2007-2017 sample of Chinese A-share listed firms, we identify the following effects of CMI on military firms’ performance. (1) The market value of military firms significantly increases after the establishment of the CMI policy in 2015 and the market value of military firms is on average 6.682% higher after 2015. (2) This effect is robust to propensity score matching, instrumental regression, alternative measures of corporate market value. (3) The positive impact of CMI on military listed firms’ market value is stronger for firms with lower innovation ability and weaker corporate governance, suggesting that the CMI policy can improve the research and development abilities and ease the agency conflicts of military firms. (4) After 2015, military firms with weaker financial constraints and those located in provinces with lower marketization levels perform better. Overall, offering a micro-perspective on military firms, this paper complements the growing literature on defense economics and clarifies how CMI improves military firms’ performance.

The impact and differences between cross-border and domestic mergers and acquisitions on the market value of firms

Cross-border M&A has become the main mode of foreign direct investment for Chinese companies. The text uses the literature to briefly analyze the types of M&A, the different effects of different M&A types on the economy, and the effects and differences between cross-border and domestic M&A on the market value of companies, and to make policy recommendations that require attention to the integration of five aspects: strategy, organization and systems, finance, human resources and culture.

The market value of green innovation: A comparative analysis of global renewable energy firms

This paper conducts an overall, cross-country comparative study on the issue of market value of green innovations. First, we find that green patents and their citations have smaller or insignificant impacts on the market value of renewable energy firms. Second, the positive impacts of R&D investment and patent count on the market value in Europe and China are higher than those in the United States.

Should Firms in Emerging Markets Invest in R&D? Evidence from China’s Manufacturing Sector

Analyzing micro-level firm data from the Chinese manufacturing sector, this study provides compelling evidence that firms in emerging markets that invest in research and development (R&D) for product differentiation significantly increase firm performance as measured by market power, profitability, and earning quality. Privately held (non-state-owned), mid-size, Shenzhen exchange-listed firms experience the largest boost to firm performance when they invest in research and development. However, analyzing the contribution of R&D investment to firm market value, we reveal that while R&D investments are valued by institutional investors, the potential for investment in R&D to boost firm performance is not recognized by individual investors, who dominate Chinese financial markets. This finding suggests that managers may under-invest in R&D if equity compensation comprises a large share of the overall compensation package.

Moderating the connections: media coverage and firm market value

PurposeThe purpose of this paper is to explore how a politically connected firm moderates the relationship between media coverage and market value. More specifically, the authors are interested in the interplay of an external corporate governance (CG) mechanism with an internal one. By interacting different mechanisms, this paper advances the empirical setting of application and functions of the corporate governance.Design/methodology/approachThis paper tests the hypotheses presented using panel data with a fixed-effect model, by assembling and exploiting a unique, hand-collected set of data on media coverage consisting of over 164,000 media reports and a politically connected board of directors comprising over 12,000 CVs tracked from 2010 to 2014. Data is originally from Brazil, a country where political connections are highly used by firms and that has been a place of much research on corporate political activity.FindingsThe results of this paper suggest that a politically connected board of directors can mitigate the negative effects of media coverage on market value. Overall, the results imply that the validity of a CG mechanism might be affected by other mechanisms.Research limitations/implicationsThe findings of this paper imply the need for research focusing on the mutual effects of different CG mechanisms. While CG is understood as a set of mechanisms, new research could focus on the interplay of these mechanisms.Practical implicationsThe findings suggest that the presence of former politicians and government officers on the board dissipates bad news reported by the media and boosts market value when media is positive. To maximize investment returns, investors should analyze firms' political human capital.Originality/valueTo the best of the authors’ knowledge, this paper is the first to develop hypotheses on the moderation effects of a politically connected board on the relation between media coverage and market value. This is relevant because this brings insights on how firms could jointly manage these mechanisms.

CEO risk preferences, hedging intensity, and firm value

We examine the effect of hedging with different derivative instruments on the market value of firms run by CEOs with different risk preferences – based on a noble dataset over five years. We focus on the interest rate, commodity, and foreign exchange derivatives and find striking similarities in the hedging intensities of risk-seeking and risk-averse CEOs. Our findings show that when the average firm experiences an extreme (three-standard-deviation) change in interest rates, commodity prices, or foreign exchange rates, its derivatives portfolio creates only modest gains, regardless of CEO risk preferences. These findings are consistent with the view that hedging is just an insurance policy, not a value-increasing strategy. Our results suggest that CEOs, irrespective of their different risk preferences, are unwilling to forgo wealth-creating projects to hedge corporate risks.

The role of slack resources in explaining the relationship between corporate social responsibility disclosure and firm market value: a case from an emerging market

ABSTRACT The purpose of this study is to investigate the moderating effect of slack resources (namely, profitability and cash holdings) on the relationship between corporate social responsibility disclosure (CSRD) and firm market value. The authors test the hypothesis through performing panel data analysis for a sample of 95 non-financial Jordanian firms listed on the Amman Stock Exchange from the period 2011 to 2016. Content analysis was employed to evaluate the level of CSRD based on an index of 42 items and four themes. While the findings show no significant relationship between CSRD and firm market value, higher slack resources were found to positively moderate this relationship. The outcomes therefore suggest that slack resources accentuate the effect of CSRD on firm market value. The use of Jordanian firms is distinctive and provides valuable insight into contexts in which the market tends to place less weight on a firm's CSR activities.

The impact of GDPR infringement fines on the market value of firms

PurposeThis paper aims to investigate the impact of the General Data Protection Regulation (GDPR) infringement fine announcements on the market value of mostly European publicly listed companies with a view to reinforcing the importance of data privacy compliance, thereby informing cyber security investment strategies for organisations.Design/methodology/approachPrevious studies have shown (varying degrees of) evidence of a negative impact of data breach announcements on the share price of publicly listed companies. Following on from this research, further studies have been carried out in assessing the economic impact of the introduction of legislation in this area to encourage firms to invest in cyber security and protect the privacy of data subjects. Existing research has been predominantly US centric.FindingsUsing event study techniques, a data set of 25 GDPR fine announcement events was analysed, and statistically significant cumulative abnormal returns of around 1% on average up to three days after the event were identified. In almost all cases, this negative economic impact on market value far outweighed the monetary value of the fine itself, and relatively minor fines could result in major market valuation losses for companies, even those having large market capitalisations.Originality/valueThis research would be of benefit to business management, practitioners of cyber security, investors and shareholders as well as researchers in cyber security or related fields (pointers to future research are given). Data protection authorities may also find this work of interest.

Capital Structure and Firm Value Relationship: The Moderating Role of Profitability and Firm Size Evidence from Amman Stock Exchange

The study objects for determining whether there is an impact of financial leverage in the capital structure on firm market value, and to determine whether profitability and size of firms play a moderating effect role on the impact relationship of financial leverage on firm market value. The cluster sampling method is used in the selection of the sample among the listed firms at Amman Stock Exchange, where the utility-energy and the food-beverage listed firms are the two cluster, which is selected to constitute the sample. The secondary data covering the period 2011-2020, of the entire listed 5 utility-energy and 8 food beverage firms, had collected and used in the analysis and hypotheses testing. Tobin;s Q is used as an indicator for firm value, and debt ratio is used as a measure of debt in the capital structure mixing. Profitability is measured through the return on assets ratio, while the natural logarithms of total assets is used as a measure for firm size. Using the regression method, the study shows that debt in the capital structure has insignificant impact on firm value, while the results demonstrate that profitability and firm size, each of which, plays a moderating effect role in the effect relationship of debt in the capital structure, on firm market value.

Carbon performance and firm value of the World's most sustainable companies

This study examines how carbon performance affects a firm's market value. It also studies how this effect is driven by leadership, gender diversity and innovation capacity. This study used a panel of the world's most sustainable companies ranked according to Corporate Knights between 2013 and 2019. The results revealed that carbon performance positively influenced firm market value, thereby indicating that investors rewarded firms with low levels of carbon emissions. This positive effect was more prevalent in firms with a high level of gender diversity and innovation capacity. The findings also demonstrate that rank-up and high-polluting firms continually increased their efforts to be sustainable, which increased the positive effect of carbon performance on firm value. Our results are robust to alternative measures and concerns about endogeneity.

Carbon performance, financial performance and market value: The moderating effect of pay incentives

AbstractWe investigate the interrelationships among carbon performance, CEO Pay, executive compensation, financial performance and market value. Using data relating to non‐financial firms from UK FTSE 350 from 2009 to 2018, our findings are fourfold. First, our results suggest that actual carbon performance is negatively associated with financial performance and market value of firms. Second, we document that self‐reported carbon performance has no effect on financial performance. By contrast, we observe that self‐reported carbon reduction initiatives performance has positive impact on market value. Third, our results suggest that CEO Pay, and executive compensation have positive moderating effect on the association between self‐reported carbon performance and financial performance. In addition, we show that self‐reported carbon performance–market value nexus is positively moderated by CEO Pay and executive compensation. Fourth, we observe that CEO Pay, and executive compensation have no moderating impact on actual carbon performance–market value nexus. Our findings demonstrate that while firms appear to employ compensation incentives to symbolically enhance their self‐reported carbon performance, this does not result in actual carbon emission reduction. Our findings have key implications for policymakers.

Do Investor Overconfidence and Loss Aversion Drive Saudi Firm Market Performance? The Moderating Effect of Corporate Governance

This study investigated the impact of investor psychological bias on a firm’s market value. In detail, we examined the effect of investor overconfidence (optimism) and loss aversion (pessimism) on firm market value. We also aimed to investigate the moderating effect of corporate governance on the relationship between investor behavior biases and firm market value. This study used a sample of 143 firms listed on the Saudi Stock Exchange over the period from 2012 to 2021. The results suggest that investor overconfidence affects a firm’s value positively. On the other hand, loss aversion is negatively associated with the firm’s market value. Furthermore, we find that corporate governance (measured by board size and board independence) enhances the positive association between overconfidence and firm market value. In contrast, we find that corporate governance seems to marginally mitigate the negative effect of loss aversion.

Benefit synergy or “fishing in troubled waters”? Economic policy uncertainty and executive perquisite consumption

PurposeEconomic policy uncertainty (EPU) has huge impact and harm on real economy, so the economic logic and other economic effects behind this must be further studied. By constructing the “China Economic Policy Uncertainty Index” to capture the degree of EPU faced by Chinese companies, the authors empirically test whether and how EPU affects the level of executives' perquisite consumption.Design/methodology/approachThis study investigates the relationship between EPU and executive perquisite consumption based on a sample of 3,185 publicly listed firms in China. To examine the relationship between EPU and executives' perquisite consumption, a mixed least squares method was used for regression. To alleviate the problem of missing variables that do not change over time and control the influence of unobservable individual heterogeneity at the firm level, the firm fixed effects model is used for regression.FindingsThe study finds that EPU is positively associated with executive perquisite consumption. This positive association is stronger for firms with smaller size, lower management shareholding and higher levels of separation of ownership and control. Effective external governance (i.e., analyst coverage, media coverage, auditor and market competition) can mitigate the relationship between EPU and executive perquisite consumption. Further analysis reveals that EPU increases executive perquisite consumption by holding more cash and decreasing firm risk taking. EPU hurts market value of firms by boosting executive perquisite consumption and tunneling.Practical implicationsIn an environment with high EPU, the board of directors should reduce managers' compensation performance sensitivity to ease the agency conflict caused by uncertainty. Firms should improve their governance mechanisms and standard and pay attention to their environmental changes. Policymakers should pay attention to maintaining the continuity and predictability of policies, stabilizing the economic policy expectations of market entities and avoiding frequent changes in policies that can harm economic and firm value. The regulatory authorities should actively guide listed companies to increase active information disclosure during periods of high policy uncertainty.Originality/valueThis study contributes to the research on corporate governance by showing how EPU influences executives' behaviors. The authors advance relative studies by showing that this uncertainty embedded in a firm's external environments influences executive perquisite consumption. This study also contributes to the literature on how internal and external governances influence corporate behavior during uncertainty. These findings extend this line of research by suggesting that effective external governance is an attribute that can alleviate the effect of uncertainty on managers' opportunistic behaviors.

Health and safety regulations and stock returns: evidence from the 1974 Swedish legislative lottery

This article provides causal evidence on a long-standing controversy in the finance and labour literature, namely, whether better health and safety in the working environment is in the best interests of firm owners. While, on the one hand, an influential strand of the literature argues that improvements in workers’ health and safety provision can increase costs and harm the market value of equity, another well-consolidated strand of the literature argues that such improvements can reduce costs and create shareholder value. It is empirically challenging to study the relation between the work environment and equity value due to their endogenous relation. To overcome this challenge, I utilize a historic natural experiment that uniquely isolates the effects of mandated investments in health and safety provision on firm market value: on 27 March 1974, the Swedish hung parliament drew a lottery ticket to decide on a legislative proposal that mandated companies to improve their employees’ work environment. The lottery resulted in the approval of the proposal. I find that this outcome led to an immediate and sizable decrease in the market value of Swedish companies that persisted for several days.