Number Of Business Segments Research Articles

Effect of Tax Avoidance and Company Complexity on Firm Value: The Role of Transparency as a Moderating Variable

This study aims to analyze the effect of tax avoidance and company complexity on firm value with information transparency as a moderating variable so that internal and external parties can evaluate management performance to increase firm value positively. In this study, panel data regression and Moderated Regression Analyst (MRA) were carried out on 78 public manufacturing companies on the IDX during the 2017-2019 period. Tax avoidance is measured by the BTD proxy, the level of complexity is measured by the number of business segments, firm value is measured by Tobin's q proxy, and information transparency is measured by the transparency index released by BAPEPAM. The results show that tax avoidance has a significant negative effect on firm value and firm complexity does not have a significant effect on firm value, while information transparency moderates the relationship between tax avoidance and firm value but is unable to moderate the effect of firm complexity on firm value.

The preparedness to adopt new accounting standards: a study of European companies on the pre-adoption phase of IFRS 15

The mandatory introduction of IFRS 15—“Revenues from Contracts with Customers”—provides a relevant innovation in revenue recognition. It introduces a single comprehensive model of accounting for revenues arising from contracts with customers. This exploratory study provides evidence on the preparedness of European companies to adopt IFRS 15 by analyzing information on the expected impact disclosed in the pre-adoption phase. To this aim, the analysis groups companies according to the similarity in the content of the information disclosed in their 2017 financial statements. It then aims to identify the determinants of membership in each segment or informative group by applying an ordinal logistic regression model. Results suggest that several firm-level factors influence the disclosures on the expected impact provided in the pre-adoption phase. Results confirm that the profitability and the company size are significant determinants of the quality of disclosure on expected impact. In addition, the complexity of the business measured by the number of business segments is associated with better disclosures in the pre-adoption phase.

PENGARUH STRUKTUR UTANG, PERINGKAT KREDIT, DAN STRUKTUR MODAL TERHADAP IMBAL JASA AUDIT

Introduction: The purpose of this study is to empirically examine any effect of short-term debt structure, credit ratings, and capital structure on the audit fee. The sample used in this study are the companies listed in the PT Pemeringkat Efek Indonesia (Pefindo) and the Indonesia Stock Exchange. Methods: Data were analyzed using linear regression.The independent variables in this study are the proportion of short-term debt, credit ratings, and capital structure. Dependent variable is audit fee. This research uses the control variables representing firm size, its complexity, and risk. Number of assets and current assets to total assets ratio represent the size of the company. Number of business segments and the proportion of export sales to total sales represent the complexity of the company. Risk represented by the ratio of short-term liabilities to total assets, short-term liabilities to total assets ratio, quick ratio, and return on assets. Results: Hypothesis testing shows that the proportion of short-term debt does not significantly influence audit fee. Ratings have a negative impact on the audit fees of listed companies in Indonesia's credit rating. Capital structure does not significantly influence audit fee. Conclusion and suggestion: This study has limitations that are audit fee is measured by the natural logarithm of the nominal value of professional fees expense presented in the financial statements of the company and there is a possibility of mediating variables such as risk governance and audit, in examining impact of the proportion of debt and capital structure on audit fee.

An Agency Perspective on Firm Diversification, Efficiency and Performance: Evidence From Malaysia

I examine, from the agency perspective, the relationship between three important corporate measures among the Malaysian publicly-listed family-controlled firms: firm diversification, asset utilization efficiency and firm performance. I also explore the role of board independence in moderating the firm diversification-performance relationship. My findings suggest that the greater the extent of firm diversification, the poorer will the asset utilization efficiency be. The poorer efficiency is likely to have caused the equally poorer performance for the firms in my findings. Notably, firm diversification is found to be more detrimental to performance for those firms affiliated to business group compared to firms without group affiliation. The group-affiliated firms which are found to be more diversified than the non-group firms, could have engaged in greater diversification for the self-interest of the controlling family. Specifically, I find that the agency-driven diversification causes the ROA (Tobin’s Q) of the firms to be lowered by 0.354% (0.026) for every additional increase in the number of business segments as the measure of firm diversification. In terms of the moderating effect of board independence, my finding shows that audit committee of board comprises entirely of independent outside directors positively moderate the firm diversification-performance linkage and is capable of reversing the apparently negative linkage between the two.

Pengaruh luas pengungkapan informasi, konsentrasi kepemilikan dan diversifikasi pada biaya modal ekuitas: studi pada perusahaan non-keuangan di Indonesia

T his study aims to investigate the effect of disclosure, ownership concentration and diversification on the cost of equity capital among non-financial Indonesian firms using IDX data during 2010-2014 periods . This study involves both mandatory and voluntary disclosure that distinguished from previous studies in the context of Indonesia that tend to use only mandatory or voluntary disclosure. Th is study show s that the disclosure and the concentration of ownership significantly and negativey influence the cost of equity capital. Both m andatory and voluntary disclosure tend to have negative impact on the cost of equity capital . It turns out that t he mandatory disclosure ha s a greater influence on the cost of equity capital than the voluntary disclosure. While, b usiness diversification , that are measured by Herfindahl Index and the number of business segments, significantly and positively affect the cost of equity capital. Lastly, relevant theoretical and practical implications are drawn from this study. Keywords: Disclosure, ownership concentration, business diversification, cost of equity capital

PENGARUH SOLVABILITAS, SEGMEN OPERASI, DAN REPUTASI KAP TERHADAP AUDIT DELAY PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

Timeliness is one of the indicators used in the measure how quickly and accurately a company in publish financial reports in the context of decision making for investors. The information presented on time is considered able to provide a description of the condition that the company in a state of healthy both in the financial management internal control and routine operational activities. Audit delay is defined as a shift in the time that caused by delays in the settlement of the annual financial audit reports. This can occur because of a problem that appears not only from internal company but can also occur because of external factors. In this research we examined whether the solvency, operating segment of the company, and reputation Public Accountant (the big four and non-the big four) have an impact on the duration and scope of the work of the auditor. The object of this research is manufacturing companies listed in Indonesia Stock Exchange period 2011-2013. This research uses linear regression to test is whether or not the influence of solvency, operating segment and reputation Public Accountant to audit delay, aided by a software program eviews 6 and PASW Statistics 18. The results of this research are (1) the level of solvency of companies has positive effect on audit delay, (2) the number of business segments and the number of geographical segment has a negative effect on audit delay, (3) the reputation of Public Accountant has positive effect on audit delay.

PENGARUH DIVERSIFIKASI PERUSAHAAN TERHADAP EXCESS VALUE (Studi Empiris pada Perusahaan Publik yang Terdaftar di BEI Periode 2005-2009)

The purpose of this study was to examine the effect of corporate diversification to excess value. Corporate diversification has been a debate various parties, whether diversification can bring benefits to the company or bring a negative impact on long-term competitive advantage. In this study estimated that the diversification strategy will enhance share holder value in public companies listed in Indonesia Stock Exchange. The sample used is selected by using purposive sampling technique in the period 2005-2009 are included on the specified criteria. The selected sample of 44 companies. Pooling the data processing is done in order to obtain 220 observations. The instrument used to test the hypothesis is multiple regression analysis. There are 8proxiesused In this research include corporate diversification, leverage, earning growth, the level of investment opportunities, industry type and number of business segments, firm size and age. The results of this study indicate that no significant influence on corporate diversification, investment to opportunities set, industry type and number of business segments of the excess value so that the hypothesis is rejected In the relation of characteristics of firms, indicate leverage, earning growth, size and age of firms have a significant effect on excess value.

Diversification of Chinese companies: an international comparison

PurposeThe purpose of this paper is to provide a systematic comparison of the level of business diversification in China and eight other large economies for the 2001‐2005 period. The reasons why publicly listed Chinese firms are more diversified than companies elsewhere are investigated.Design/methodology/approachData were collected on the number of business segments in which publicly traded companies operate from the Thomson One Banker database and analyzed using non‐parametric tests and regression analysis.FindingsThe mean number of business segments per firm varies significantly by country. Notably, there is no evidence in the authors' sample that emerging‐market companies are systematically more diversified than their developed‐market counterparts. In most countries, firms have become less diversified over time. However, there is no such trend in China. The level of diversification of Chinese enterprises does not vary over the authors' study period (2001‐2005), making Chinese firms the most diversified in the sample by 2005. China's growth rate does not seem to explain the higher level of firm diversification. However, the authors find that Chinese state‐owned enterprises (SOEs) diversify their operations more aggressively than other Chinese firms.Research limitations/implicationsOwnership data and business group affiliations were not available for all firms in the sample, making it difficult to control for these effects across economies. The study's findings are limited to publicly traded firms.Practical implicationsGovernment involvement in SOEs may be contributing to a divergence in the pattern of business diversification between China and other economies.Originality/valueThis paper quantifies anecdotal evidence that Chinese firms are more diversified than similar firms in other countries.

Does Corporate Diversification Destroy Value?

ABSTRACTWe analyze several hundred firms that expand via acquisition and/or increase their number of business segments. The combined market reaction to acquisition announcements is positive but acquiring firm excess values decline after the diversifying event. Much of the excess value reduction occurs because our sample firms acquire already discounted business units, and not because diversifying destroys value. This implies that the standard assumption that conglomerate divisions can be benchmarked to typical stand‐alone firms should be carefully reconsidered. We also show that excess value does not decline when firms increase their number of business segments because of pure reporting changes.

The Effect of Industry Diversification on Consensus and Individual Analysts' Earnings Forecasts

We study the effects of company diversification and analyst diversification on consensus and individual analysts' earnings forecasts. Company diversification is measured both as the number of segments reported by a company and as an entropy measure which decomposes the total diversification into an unrelated and a related component. For the consensus forecast analysis, we examine the effect of these variables both on forecast accuracy and inter-analyst earnings forecast disagreement. For the individual analyst forecast analysis, we examine the effect of the number of business segments followed by an analyst and analyst diversification on individual analyst forecast accuracy. We develop a new measure of individual analyst's diversification which takes into consideration the business segments of all companies followed by an analyst, and its interaction with the business segments of the company whose earnings are being forecasted. The results of our study show that as the level of a company's total diversification increases, analysts are less accurate in their earnings forecasts and have more inter-analyst disagreement. Analysts are less accurate and have more disagreement as unrelated diversification increases. A company's related diversification has no significant impact on these variables. For both forecast accuracy and inter-analyst disagreement, the impact of a unit of unrelated diversification is significantly higher than that of the impact of a unit of related diversification. For individual analysts' earnings forecasts, as the number of business segments followed by an analyst increases and as his level of diversification increases, his earnings forecast accuracy significantly declines. The results of our study have implications for researchers who use analysts? earnings forecasts in their studies, investors who use these forecasts for company valuation and for brokerage firms in evaluating individual analysts.