Shareholder Value Research Articles

Impacts of digital technology innovation for social responsibility of platform enterprises on shareholder value

PurposeConsidering rapid digitalization development, this study examines the impacts of digital technology innovation on social responsibility in platform enterprises.Design/methodology/approachThe study applies the event study method and cross-sectional regression analysis, taking 168 digital technology innovations for social responsibility issued by 88 listed platform enterprises from 2011 to 2022 to study the impact of digital technology innovations for social responsibility announcements of different announcement content and platform attributes on the stock market value of platform enterprises.FindingsThe results show that, first, the positive stock market reaction is produced on the same day as the digital technology innovation announcement. Second, the announcement of the platform’s public social responsibility and the announcement of co-innovation and radical innovation bring more positive stock market reactions. In addition, the announcements mentioned above issued by trading platforms bring more positive stock market reactions. Finally, the social responsibility attribution characteristics of the announcement did not have a significant differentiated impact on the stock market reaction.Originality/valueMost scholars have studied digital technology innovation for social responsibility through modeling rather than second-hand data to empirically examine. This study uses second-hand data with the instrumental stakeholder theory to provide a new research perspective on platform social responsibility. In addition, in order to explore the different impacts of digital technology innovation on social responsibility, this study has classified digital technology innovation for social responsibility according to its social responsibility and digital technology innovation characteristics.

Critical Perspectives of Organisational Behaviour towards Stakeholders through the Application of Corporate Governance Principles

Corporate governance is gaining interest not only from investors but companies that want to operate in international markets, prompting a more thorough analysis of the field to prioritise stakeholder interests alongside shareholder value. By adopting a holistic approach that considers stakeholders’ diverse needs and expectations, companies can build resilience, foster trust, and create sustainable value for all stakeholders, ensuring long-term success and societal impact. This paper analyses corporate governance principles applied at the international, European, and national levels, emphasising the importance of the field for the stakeholders. The practical approach of the paper analyses the application and compliance of the corporate governance code of 18 companies in the field of financial intermediation and insurance, which are listed on the Bucharest Stock Exchange, underlining the crucial role of transparency of operations in instilling confidence and reassurance in stakeholders. The conclusions present proposals for measures to improve corporate governance practices at the level of companies.

Do Funding Decisions, Dividend Policy, and Investment Decisions effect on Islamic Firm's Value?

This research aims to examine the influence of Funding Decisions, Dividend Policy and Investment Decisions on Company Value in Companies listed on the Jakarta Islamic Index (JII) for the 2017-2020 period. This research uses quantitative research with a descriptive research strategy. The population of this research is 30 companies listed on the JII for the 2017-2020 period. The sample selection in this study used purposive sampling with a total sample of 22 companies, so the number of observations was 88. The data used is secondary data. Data collection techniques through the company's official website. The research results prove that Funding Decisions have a significant positive effect on Company Value, Dividend Policy has a significant and negative effect on Company Value, and Investment Decisions have a significant and positive effect on Company Value. The managerial implication in this research is that the capital structure chosen can influence the company's cost of capital. Dividend decisions can also affect a company's share price. It is important to conduct careful analysis and consider the various factors that influence these decisions to ensure that the company operates efficiently and can increase value for shareholders

Enhancing the Appeal: Impact of Economic Value, Market Value, Return Equity, and Total Assets Turnover on Stock Prices

This research aims to determine the influence of economic value added, market value added, return on equity, and total asset turnover on stock prices. The population in this study was companies that were included in the LQ45 index, and the companies selected as research samples were 22 companies. The sampling technique uses a purposive sampling technique. Data were analyzed using descriptive statistical analysis, classical assumption tests, multiple linear regression analysis, and hypothesis testing using the t-test and determination test. The research results show that partial economic value added and total asset turnover do not affect stock prices; market value added has a positive and significant effect on stock prices, while return on equity has a negative and significant effect on stock prices. Managerial implications, emphasizing the significance of enhancing economic value, market value, ROE, and total assets turnover to drive stock price performance. Managers should focus on strategies that improve these metrics and enhance shareholder value and market competitiveness. Understanding the interplay between economic values. Total assets turnover is vital for effective managerial decision-making in the stock market realm. This study delves into the implications of these factors on stock prices for managers navigating the complexities of financial markets

The Level of Cash Holdings and Financial Performance: Evidence from Firms Listed on Borsa Istanbul 50 Index

Cash is of great importance to firms operating in emerging economies. Cash, one of the most important assets, creates shareholder value when rationally used by firm management. This paper aims to reveal the relationship between financial performance and cash holdings by using a sample that consists of non-financial firms listed in Borsa Istanbul 50 index. The result of empirical analysis provides strong evidence that financial performance is positively influenced by cash holdings. Further, firm size, capital intensity ratio and current ratio did not significantly influence the financial performance of sample firms, while financial performance of sample firms is significantly influenced sales growth and financial leverage. Overall, the research findings indicate that firm-specific factors are important factors that affect the relationship between financial performance and cash holdings. The present paper provides important insights for creditors, shareholders and firm management on the impacts of cash holding levels on financial performance.

A simulation model for addressing supply chain disruptions under a multi-capital sustainability perspective: a case study in the agri-food sector

ABSTRACT In recent years, interest in the resilience and sustainability of supply chains has significantly increased. In fact, various events, such as the COVID-19 pandemic, have highlighted the weakness of global and local supply chains. Further, people are giving increasing importance to concepts such as social well-being, human rights, environmental protection. The maximisation of shareholder value is no longer the only goal for companies. The main purpose of this paper is to answer the following question: is there a strategy to address agri-food supply chains disruptions while revitalising local economies and improving – at the same time – a number of sustainability-related aspects? To this aim, a simulation model is designed, then tested and validated through a supermarket supply chain case study. The results show that disruptions can be exploited to revitalise small local suppliers and simultaneously increase several sustainability indicators from a multi-capital perspective. Several managerial insights are also provided.

Climate change exposure, shareholder wealth, and the adoption of the Paris agreement: A text-based approach

Taking advantage of a distinctive measure of firm-specific exposure to climate change derived from sophisticated textual analysis, we examine the effect of climate change exposure on shareholder value using the signing of the Paris climate agreement. We find that companies more exposed to climate change experience more favorable market reactions to the adoption of the agreement. Specifically, a rise in climate change exposure by one standard deviation improves market reactions by 7.3%–8.8%. Further analysis corroborates the results, including propensity score matching, entropy balancing, an instrumental-variable analysis and Oster (2019) assessment of coefficient stability. Notably and somewhat surprisingly, the positive market reactions can be more attributed to the new business opportunities associated with the actions enabled by the Paris agreement than to the reduction in the physical and regulatory risk.

Merger and Acquisition in Banking Industry

Mergers and acquisitions (M&A) represent significant strategic maneuvers in corporate finance and management, involving the combination, acquisition, or division of companies to achieve various objectives. This paper explores the fundamental concepts of M&A, focusing on mergers as agreements uniting two companies into one entity. Mergers are pursued to expand reach, enter new markets, diversify offerings, or gain market share, ultimately aimed at creating shareholder value. Two primary types of mergers are discussed: conglomerate mergers, which involve companies in unrelated business activities, and congeneric mergers, where companies operate in the same sector with overlapping factors. Understanding the nuances of these mergers is essential for stakeholders involved in corporate decision-making. Additionally, regulatory frameworks, such as the Companies Act, 1856, play a crucial role in governing M&A transactions, although regulatory landscapes may vary across jurisdictions. By delving into the intricacies of M&A, this paper provides insights into strategic management practices and the dynamic landscape of corporate restructuring.

Financialisation, shareholder value orientation, and the decline of trade union membership in the EU

This article shows that an orientation towards shareholder value and corporate indebtedness at non-financial firms have been negatively associated with union density in the EU over the past 21 years. We argue that the financialisation of non-financial firms makes them prioritise their ‘external (economic) balance’ at the expense of a cooperative ‘internal equilibrium’ model. In other words, corporate financialisation pushes non-financial firms to shift to non-participatory, market-based HR systems that directly undermine the role of trade unions. This study examines this corporate financialisation-induced shift within the EU in the wake of deeper economic integration since 1999 and provides panel data econometric evidence that it has significantly undermined union membership.

Indonesia Insurance Corporate Governance: A Literature Review

The aim of this research is to present and evaluate corporate governance framework for insurance companies in Indonesia based on previous researches related to corporate governance and The Indonesia Financial Services Authority Regulation. We evaluate concerning to governance objectives that include protecting shareholder interests, enhancing shareholder value, ensuring accountability, managing risk, promoting ethical behavior, transparency and disclosure, balancing interests, strategic decision-making, compliance with laws and regulations, efficient operations, long-term sustainability, stakeholder engagement, adapting to change, creating a positive reputation, and facilitating investment. We discuss the corporate governance framework for insurance companies in Indonesia based on the Indonesia Financial Services Authority regulation that states governance structure, corporate governance code, self-assessment & governance report, governance process and corporate governance principles to meet governance objectives. Although every year all insurance companies report corporate governance, but some companies have been stopped by the Authority. This raises research problems for the future relating to why insurance companies that have complied with corporate governance provisions have been stopped by the Authority.

Analyzing the impact of environmental strategies on corporate governance and long-term performance

This study delves into the complex relationships between corporate governance, environmental strategies, and the enduring success of publicly traded companies. Through empirical analysis, the study explores how adopting diverse sustainability measures influences stakeholder involvement, board structure, and shareholder value creation. This study combines an extensive dataset of financial information from listed companies with a quantitative examination of corporate governance practices. It also incorporates detailed case studies of leading firms implementing noteworthy environmental strategies. The study uses correlation analysis to assess environmental strategies' influence on corporate governance dynamics and long-term performance within this sector. The study highlights a positive correlation between robust environmental strategies and enhanced corporate governance practices. These include heightened board diversity, increased stakeholder engagement, and strengthened risk management frameworks. Notably, the study establishes a strong link between proactive sustainability efforts and outstanding long-term financial performance, as evidenced by key performance indicators such as return on equity and total shareholder return.

Influence of Good Corporate Governance and Corporate Social Responbility To Company Value with Profitability as a Moderation Variable (Studies on Manufacturing Companies Listed on the Stock Exchange Indonesia Year 2017-2021)

Purpose: The study added profitability as a moderating variable, predicting that the higher the profitability a firm has achieved, the more valuable it will be. Companies that can survive over the long term are reflected in further improvements in corporate value. Theoretical framework: Agency theory focuses on two individuals, namely the principal and the agent. The principal delegates responsibility for decision making to agents. Both principals and agents are assumed to be rational economic people who are solely motivated by self-interest, but they have difficulty differentiating respect for preferences, beliefs and information. Material and Method: This study uses a kind of quantitative research. The audit committee, board size, excellent corporate governance, and corporate social responsibility are the study's independent variables. Tobin's Q-ratio is the dependent variable in this investigation. The moderator variable for this study is profitability. The study uses secondary data, i.e. data from financial reports. The survey was conducted on all manufacturing companies listed on the Indonesian Stock Exchange. A quantitative approach was used using mathematical models for collection and analysis using statistical formulas. The sampling technique of the data collection method used in this study is literature review. internet media. The study population is manufacturing companies listed on the Indonesian Stock Exchange (IDX) between 2017 and 2021. The sample size for this study is 40 companies he listed on IDX between 2017 and 2021. The results show that the size of a company's board of directors has a significant impact on corporate value in the IDX-listed manufacturing industries from 2017 to 2021. Findings: The results show that audit committees will not have a significant impact on the enterprise values of manufacturers listed on the IDX from 2017 to 2021. Findings show that corporate social responsibility (CSR) does not have a significant impact on corporate value for manufacturers listed in the IDX 2017-2021. Research practical & Social Implication: Based on the research, the results of this study also show that the size of a company's board of directors helps increase shareholder value. Originality/value: This is evidenced by her MRA test results in the previous chapter, where profitability amplifies the effect of a company's board size on its value. After all, the more profitable a company is, the more the board will be happy to work and the more valuable the company will be.

When Do Shareholder Agreements Add Value? Mitigating Superprincipal-Agency Conflicts in Family Firms

Researchers are divided on whether shareholder agreements (SAs) improve or hurt firm value. We offer family firms as a context where SAs add value and explain why; SAs limit “superprincipal” agency conflicts between family owners and other family members. A panel of French firms and a second study of French Initial Public Offerings show shareholders value SAs more in family than in nonfamily firms. Among family firms, SAs add greater value when weak governance undermines family owners’ resistance to other family members’ demands. Our study helps reconcile competing theory about SAs and distinguishes superprincipal conflicts from other family-firm agency problems.

Corporate social responsibility and the choice of payment method in mergers and acquisitions

This study examines the relationship between corporate social responsibility (CSR) and the choice of payment method in mergers and acquisitions (M&As). We find that acquiring firms' CSR is positively related to cash payments but negatively related to stock payments for acquisition deals, particularly for poorly governed firms with excessive CSR. Further analysis indicates that cash payments are positively related to acquisition bid premiums and reduce the likelihood of bid failure, but this payment method adversely affects shareholder wealth of poorly governed high-CSR acquiring firms. Our evidence suggests that managerial agency-motivated CSR is a determinant of the payment method in M&As that has important implication for acquirer shareholder value.

ESG disclosure and financial performance: Empirical study of Vietnamese commercial banks

Environmental, social, and governance (ESG) disclosure becomes vital for banks to be transparent and accountable for their investments and lending decisions to shareholders, regulators, and society. The potential enhancement of shareholder value through ESG disclosure is still inconsistent. Empirical studies on the association between ESG disclosure and financial performance are mixed and limited in emerging economies. This study aims to examine whether ESG disclosure impacts the financial performance of 24 Vietnamese commercial banks in terms of return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study uses the feasible generalized least squares estimation method based on panel data from 2018 to 2022. The study employs content analysis on 12 themes related to environmental, social, and governance pillars to score policy disclosure based on the Fair Finance Guide Methodology. The results highlight the positive effects of ESG policy disclosure, individual environment disclosure (E), and individual governance disclosure (G) on bank financial performance. Notably, ESG, E, and G have the largest influence on ROE, with coefficients of 0.051, 0.036, and 0.027, respectively, at a 5% significance level. However, the study does not provide evidence of a statistically significant association between social disclosure and financial performance. These results provide empirical evidence for regulators and bank managers to shape ESG policies and practices aligning with international standards. AcknowledgmentESG disclosure score of 11 banks as primary data in this study is conducted under the project coordinated by the Fair Finance Vietnam coalition, as part of Fair Finance International.

A Sectoral Analysis of BSE-Listed Indian Pharma Companies

Purpose: Investors, including domestic and international firms, venture capitalists, and financial institutions, rely on research to evaluate investment opportunities in the Indian pharmaceutical sector. Research helps assess factors such as market potential, company performance, R&D capabilities, regulatory environment, and risk-return profiles. Research plays a crucial role in guiding research and development (R&D) investments and priorities within the Indian pharmaceutical industry. By identifying unmet medical needs, emerging therapeutic areas, and technological advancements, research helps companies allocate resources effectively and focus on areas with the highest potential for impact and return on investment. The current research includes analysing financial statements, such as income statements and cash flow statements, to assess the profitability and earnings stability of pharmaceutical firms, and also investigate factors influencing EPS growth, such as revenue trends, cost structures, research and development (R&D) investments, regulatory environments, and market dynamics. Additionally, the study of DPS involves evaluating dividend payout ratios, dividend yield, dividend stability, and factors driving dividend decisions, including company profitability, cash flow generation, capital requirements, and shareholder preferences. Understanding the relationship between EPS and DPS in the Indian pharmaceutical sector provides valuable insights for investors, analysts, and policymakers in assessing the financial health, investment attractiveness, and shareholder value creation of pharmaceutical companies. Pharmaceutical companies listed on the Bombay Stock Exchange were selected for the study. Speculations were tested using ANOVA and T-TEST. The audit revealed that investors can invest in Dr. Reddys Laboratories, Abbott India, and Themis Medicare for their EPS to be maximum and Dr. Reddys Laboratories, Abbott India, and Novartis India for their DPS to be maximum. Methodology: Fifteen BSE-listed pharmaceutical companies are considered for the present research work and analysed by using EPS and DPS. Result: Selected Large, medium, and small Indian pharmaceutical companies listed on the BSE were the subjects of this study's analysis of their EPS and DPS. The websites of Money Control and the BSE provided the majority of the time series data used in the study on two different variables, EPS and DPS. Five years, from 2019 to 2020 to 2022–2023 are included in the analysis of the EPS and DPS. The BSE-listed Indian pharmaceutical businesses' EPS and DPS were examined in this study. Descriptive statistics (mean, standard error, standard deviation, skewness, and kurtosis) were computed for the determined EPS and DPS. An ANOVA test is run on the EPS and DPS data to find the differences between the chosen pharmaceutical businesses listed on the BSE. It is recommended that investors put their money into Abbott India, Themis Medicare, and Dr. Reddys Laboratories in order to maximise their EPS, and Novartis India, Abbott India, and Dr. Reddys Laboratories in order to maximise their DPS. Originality/Value: The BSE-listed Indian pharmaceutical businesses' EPS and DPS were examined in this study. Descriptive statistics (mean, standard error, standard deviation, skewness, and kurtosis) were computed for the determined EPS and DPS. Based on the study, the right companies for the investors are recommended. Paper Type: Exploratory research.

Too much incentive to innovate? CEO stock option exercise and myopic R&D management

AbstractInnovation is a key driver of firm success. To encourage innovation, firms often offer equity‐based compensation, such as stock options, to better align CEOs' personal interests with shareholder value. Drawing on agency theory, we argue that stock options may not always benefit a firm by encouraging innovation. Instead, we demonstrate that CEOs intending to exercise their stock options have the incentive to be myopic in R&D management so that they can temporarily boost the stock price and, thus, increase their personal wealth. Using a unique multi‐source dataset of 335 Standard & Poor 500 companies from 2007 to 2015, we find evidence supporting this argument. Moreover, the findings suggest that factors that can affect the perceived pressure to promote innovation by CEOs might reshape the association between stock option exercise and myopic R&D management. For example, power resulting from CEO duality decreases the perceived pressure to promote innovation, which increases the likelihood of CEOs engaging in myopic R&D management when exercising their stock options. However, when shareholders present a long investment horizon or when firms have high innovativeness, CEOs perceive more pressure to promote innovation and thus are less likely to opt for myopic R&D management while exercising stock options. The findings provide important insights for better understanding and controlling managerial myopia in innovation management.

Status of Sustainability Management Education in African MBA Programmes: A Web-based Research Approach

Abstract Emerging evidence suggests that business schools in Africa are lagging behind in promoting sustainability education. Grand challenges that point to a limited focus on transformative sustainability education such as environmental pollution, conflicts, inequalities and unemployment still persist in African economies, with the profit motive remaining central to businesses’ operating philosophy. Informed by the clarion call for business schools to be key drivers of sustainability education, this study reviews the African master of business administration (MBA) curricula with the objective of assessing the status of sustainability management education. The content of the MBA curricula of 42 African business schools accredited with the Association of African Business Schools was analysed using a web-based research approach. The findings indicate that the concept of sustainability has not been sufficiently embedded into the African MBA curricula. The values and mission statements of the majority of business schools were found not to be aligned with the principles of sustainability education. It was also found that shareholder value oriented modules constitute the core curriculum of the majority of MBA programmes reviewed. An incremental elective approach was found to be the most dominant strategy used by African business schools to incorporate sustainability education in the MBA curricula. An integrative approach of embedding sustainability education focusing on re-orientation of the business schools’ values, mission, curriculum, systems, operations and governance is recommended. The increased use of experiential learning is also recommended as an effective teaching pedagogy for equipping MBA students with practical aspects of sustainability education.

The Impact of Corporate Social Responsibility on Environmental Investment: The Mediating Effects of Information Transmission and Resource Acquisition

In recent years, more and more research has focused on the impact of corporate social responsibility (CSR) on business activities. Due to the existence of two different theoretical perspectives, shareholder value theory and managerial opportunism theory, the research on CSR has reached different conclusions. Meanwhile, the motivations for environmental investments in enterprises have received attention from scholars. However, there is a lack of empirical research on the relationship between CSR and environmental investment. Therefore, this study conducts a regression analysis on the external evaluation of CSR and enterprises’ environmental investment using data from Chinese listed companies. The empirical results show a significant positive relationship between the external evaluation of CSR and enterprises’ environmental investment. The mediating tests conducted based on information transmission and resource acquisition mechanisms explain the reasons for this promotion effect, supporting the shareholder value theory. Furthermore, our research finds that this promotion effect is more significant in non-state-owned enterprises, enterprises receiving fewer environmental subsidies, enterprises disclosing environmental philosophies, and enterprises identified as key pollution-monitoring units in reports. The research findings of this study are meaningful for clarifying the economic consequences of CSR and provide practical evidence for Chinese enterprises to understand the importance of environmental investment and the government’s advocacy for enterprises to proactively engage in environmental investment.

Do Industries and Corporations of this Generation Align with the Thoughts of Milton Friedman on Corporate Social Responsibility?

This research paper delves into the alignment of modern corporate social responsibility (CSR) practices with Milton Friedman's theory that a corporation's primary responsibility is profit maximization for its shareholders. It examines the pharmaceutical, banking, and food and beverage sectors to assess Friedman's theory's relevance in the current business environment. Contrary to Friedman's 20th-century view that dismissed broader CSR obligations, the 21st century has witnessed a shift towards recognizing corporate duties toward society, the environment, and a broader stakeholder group. The study scrutinizes how these sectors balance profit goals with social responsibility, including sustainable investing, responsible lending, sustainable sourcing, waste management, and nutritional transparency. Employing a mixed-method approach with data from corporate reports and sustainability indices, preliminary findings indicate a spectrum of adherence to Friedman’s profit- centric model versus a comprehensive CSR approach. Results show that while profitability remains central, many corporations have integrated CSR into their business models to varying degrees, influenced by a complex mix of factors. This nuanced exploration provides insights into the evolving nature of CSR, offering a critical perspective on Friedman's relevance today and the degree to which corporations have embraced broader social responsibilities. It lays the groundwork for future research on the interplay between corporate profitability, shareholder value, and social responsibility, contributing valuable information for stakeholders, policymakers, and researchers interested in corporate ethics and sustainability.