Shareholder Wealth Maximization Research Articles

Examining Global Resource Mobilization: Strategies and Hurdles in Accessing the International Capital Market

The role of finance is indispensable for business entrepreneurs as it fuels both fixed and working capital, driving growth and operational efficiency. Financial decisions are crucial for directing business growth from its inception through various phases. Corporate finance is pivotal in exploring alternative methods to finance fixed and working capital needs. Capital markets, including domestic ones like India's Securities Exchange Board-regulated and international markets, serve as vital platforms for businesses to secure funding and ensure smooth operations. Effective corporate governance, shareholder wealth maximization, regulatory compliance, profitable project funding, and global brand recognition are key goals for corporations to sustain and thrive. This paper aims to delve into the Overseas Depositories' role in international capital markets, highlighting their contribution to funding corporations globally. It will also discuss the significance of two-way fungibility in trading shares and depository receipts across borders, and how overseas depositories facilitate finance raising for corporations. Additionally, the paper will examine the trading dynamics of American and Global depository receipts vis-à-vis shares in the international capital market context.

Firm Characteristics and Corporate Governance Mechanisms as Drivers of Corporate Social Responsibility Disclosure in Zimbabwe

This study extends the literature on the determinants of voluntary disclosure of corporate social responsibility (CSR) in a sample of 61 annual reports from the Zimbabwe Stock Exchange for the year ended 31 December 2020. The purpose of the study is to determine why firms voluntarily disclose CSR and whether corporate governance mechanisms have an impact on firms’ disclosure policy. An unweighted disclosure index consisting of 30 corporate social responsibility attributes was developed; using content analysis to determine the level of corporate social responsibility disclosure. The results show that corporate social responsibility disclosure is low, with the most corporate social responsibility information disclosed being community involvement disclosure (40%), followed by environmental disclosure (30%), products and consumer information disclosure (29%), and human resources disclosure (28%). In addition, using multiple regression analysis and after accounting for size, leverage, profitability and industry, the findings indicate that board independence and board of directors’ qualifications have a significant positive influence on corporate social responsibility disclosure whereas ownership concentration was found to be insignificant. With the exception of profitability, all other firm characteristics, leverage, firm size and industry sector were positive and significant in explaining the variation in corporate social responsibility disclosure. It appears that profitable firms are not motivated to increase corporate social responsibility disclosure. This may be consistent with the shareholder wealth maximization approach which renders corporate social responsibility disclosures as less important. Financial markets in Zimbabwe may not be sufficiently efficient in penalizing firms for incomplete corporate social responsibility disclosure and that regulators may need to mandate such disclosures if information asymmetry is to be reduced and market efficiency enhanced.

The Impact of Sustainable Practices on Creating Value for Banks in Emerging Countries

Objective: Analyze the impact of sustainable practices on the value of banks, located in 28 countries in emerging economies of Latin America, Caribbean, Africa, Asia, Europe and Middle East. Theoretical framework: The current lack of consensus on the impact of sustainable practices in the banking industry may be an indication of the existence of friction related to market efficiency, resulting from informational asymmetry, agency conflicts and lack of adequate signaling between different stakeholders. Methodology: Hypothesis H1 - Sustainable practices impact the value of the banks in the study is verified through a regression with pooled data and robustness tests. Results and conclusions: Banks consider that the adoption of sustainable practices does not add value in the short term. Research implications: A possible explanation for this fact is presented by the overinvestment hypothesis. According to it, the application of resources in sustainable activities causes banks to divert resources from their main objective of maximizing shareholder wealth to meet the demands of other stakeholders - which leads to a reduction in their value. Originality/value: Among the differences in this study is the analysis of banks located in emerging countries. The result obtained provides feedback to the financial market in its investment decisions in banks that adopt sustainable practices, especially in developing countries. Another aspect to be highlighted is the maintenance or change of policies adopted - by countries' regulatory entities - in terms of encouraging the adoption of sustainable practices by institutions.

Stockholder Wealth Maximization during the Troubled Asset Relief Program Period: Is Executive Pay Harmful?

This study investigates governance mechanisms and their relation to firm value, i.e., executive compensation restrictions during the regulatory period and their effects on the performance of firms that received Troubled Asset Relief Program (TARP) funds. We employ an event study to investigate the market reactions for TARP recipients, followed by OLS regression to examine the stock return effects of 10 announcements. For comparison, we also employ a multivariate regression model (MVRM) based on a system of equations with seemingly unrelated regressions (SURs). Our evidence shows that changes in firm value have a negative and significant relationship with changes in total compensation for TARP companies that have paid back their debts to the government. However, the relationship is weaker than that for TARP companies that have not paid back the bailout money.

A Comparative Study of BSE Listed Sectoral Indices of Real Estate and Banking Industry

Purpose: Shareholders are the real owners of the company. They provide capital to the business to get a better return on their investment. Maximizing shareholder wealth has become the primary goal of today's business world. No business entity can become profitable without producing a lot for various investors. There are some strategies to determine the organization productivity and valuation of investors. A cutting-edge form of top management, economic value added (EVA) is a way of valuing shareholder wealth. This helps ensure the true productivity of the organization at the expense of value and capital. The concept was first created by Stern Stewart and Co. The company proposed 164 changes in GAAP rules to calculate real economic profit and some changes in economic capital. MVA is another modern way of valuing shareholder wealth. It describes how efficiently a company uses shareholders' assets. The study made two corrections to the calculation of economic benefit and two corrections to the related population. Real estate and banking companies listed on the Bombay Stock Exchange were selected for the study. The purpose of the audit was to determine the value of investors in BSE-listed land and bank units based on EVA and MVA over a period of five years. Speculations were tested using ANOVA and T-TEST. The audit revealed that an organization like Legend Engine Corp expanded its EVA and MVA during this period. Design/Methodology/Approach: Five BSE listed industries are considered for the present research work and analysed by using EVA and MVA. Findings/Result: A profitable sector is identified. Opportunity is provided for the investors to buy, sell, or hold the stock to generate more profits in the selected sector. It has been observed that SBI has a high typical EVA unlike various banks but it has decreased in the long run. All financial organizations have a positive relationship between EVA and MVA. Originality/Value: Among the organizations in the selected countries, Godrej Properties, and DLF are positively associated with MVA and investment wealth creation every 5 years. Choosing stocks from an industry is a big problem for investors because the market is unpredictable and offers more opportunities for traders and investors to buy sell or hold stocks and earn potential profits in the market. This study aims to compare EVA and MVA to provide some recommendations for stock and industry selection to all investors. Paper Type: Comparative research

Effect of Foreign Ownership, Audit Committee, and Financial Performance on Company Value

Corporate value is used by management in running the business to maximize shareholder wealth. Audit committees, foreign ownership, and financial performance have prospects in the future so that investors will be interested in investing. This population is a manufacturing company that pays out dividends during the period 2016 to 2021 which are listed on the Indonesia Stock Exchange. The sampling technique is 222 companies. The method used is panel data regression. The findings of foreign ownership, debt to equity, total asset turnover, net profit margin, and return on assets significantly affect company value, but audit committees, current ratios, and dividends have no significant effect on company value. It is suggested that the company can improve its financial performance to maximize profit, which reflects the company internally. In addition, foreign ownership can make decisions in the company's strategy to increase the value of the company.

Does ESG privilege climate action over social and governance issues? A content analysis of BlackRock CEO Larry Fink’s annual letters

Milton Friedman famously argued that the social responsibility of business is to maximize shareholder wealth. Friedman’s view is challenged by the proponents of corporate social responsibility who suggest that firms should consider the interests of all stakeholders, and not just shareholders. Following the stakeholder approach, BlackRock’s CEO Larry Fink has made the case that firms should use the ESG (environmental, social, and governance) metric to evaluate their performance as opposed to short-term profit maximization. Fink employs his annual “Dear CEO” letters as a platform to outline his views on ESG. While these letters focus on all three ESG dimensions, the media tends to portray Fink as a climate advocate. We examined the texts of the ten letters Fink has published since 2012 to assess the extent to which Fink focused on climate issues. We found that Fink emphasized the climate dimension over social and governance dimensions only in two letters (2020 and 2022), which suggests that the thrust of Fink’s letters differs from how the media frames them. Broadly, our paper suggests that norm advocates sometimes cannot fully control how their advocated norm is interpreted and framed. Limiting ESG to climate issues has implications for its business acceptability. Specifically, this framing links business incentives to adopt ESG to the policy salience of climate issues as well as the fortunes of both the fossil fuel industry and the renewable energy sector. Second, if businesses face a legitimacy crisis from governance shortfalls or inadequate social performance, ESG will serve as a less effective tool in alleviating stakeholder concerns.

Treasury Management Practices, Financial Performance and Sustainability in Banking Sector

Abstract This study investigated the impact of treasury management practices on financial performance of the banking sector in Nigeria. Treasury management has become a crucial component of the financial performance and sustainable growth of banks. Consequently, difficulties with treasury management practices have an immediate impact on the banking industry and financial system as a whole, which can have an indirect effect on the economic growth and development of the nation. The study used secondary data extracted from annual reports of quoted deposit money banks (DMBs) in Nigeria. Panel data analysis was utilized. Descriptive statistics, correlation matrix and ordinary least square (OLS) were employed. The explanatory variables were bank deposit liabilities and earning assets whereas return on assets (ROA) and return on equity (ROE) were used as proxies for bank financial performance. The DMBs’ data was evaluated using appropriate statistical methods. According to the findings of the study treasury management practices influence the financial performance and sustainability of Nigerian DMBs. Given the highly competitive nature of the industry and the demands for financial performance, the study concluded that there is a need for a strong, effective and efficient treasury management strategy that will maximise returns, increase the value of the company’s shares and maximise shareholder wealth.

Retail Companies: The Impact of Brand Image, Advertising, Promotional, and Capital Spending on Financial Performance

The maximisation of shareholder wealth can be achieved by attaining favourable financial performance. Consequently, the organisation can fulfil the anticipated outcomes of its owners and investors. The financial performance of a corporation serves as an indicator of its efficacy and efficiency in attaining its objectives. The organisation is facing a growing demand to enhance its operational performance by implementing innovative strategies in its business management. Continual implementation of this practice is necessary to navigate a highly competitive market environment effectively. This research employs empirical data to examine and evaluate the impact of brand image, advertising spending and promotion, and capital expenditure investment on a company's financial success. The present study centres on the examination of the retail industry in Indonesia from 2013 to 2023, utilising data obtained through the purposive sampling technique. The present study aims to gather data from prior research sources that are pertinent to the keywords "brand image," "shopping investment," and "Company financial performance." Utilise Helper Harzing's Publish or Perish tool to do this. Subsequently, the data underwent analysis through the utilisation of multiple linear regression. This study examines the research and impact of brand image on consumer shopping investment. The effect of capital on a company's financial performance will be thoroughly examined in this article.

Dividend Decisions and Market Value of Firms in Nigeria

The study investigated the factors that could influence dividend decision and value of the firm. Anchored on signaling theory, the study adopted both cross-sectional and longitudinal research designs. The population of the study consisted of all listed manufacturing firms in Nigeria. The final sample size after filtering was 41 manufacturing firms giving a total of 451 year end observations. The study adopted three separate econometric models for capturing and testing for the relationship between dividend decisions and firm value. Findings of the study revealed that profitability has a significant positive effect on dividend payout while availability of investment opportunities was found to be positive but not significant. Leverage was also found to have a negative but not significant effect on dividend payout. Further, dividend payout, profitability, leverage, and investment opportunities were found to have significant positive effect on firm value. The study concludes that dividend decisions influence value of listed manufacturing firms in Nigeria and recommends amongst others that corporate managers should implement dividend policy that will enhance shareholders wealth maximization and take care of the investment opportunities of the firm.

Dividend Policy and Firms’ Value Nexus: Do Walter and Gordon Relevance Theories Hold Water?

This study is an attempt to join on the argument on whether dividend policy is either relevant or irrelevant on the firms’ market value in Nigeria. To achieve this, the data were obtained from selected 20 quoted firms from ten sectors of the Nigeria economy spanning from 2015 to 2021, taking care of the variables; dividend per share, earnings per share, and market value proxied by market price per share obtained from Nigeria Exchange Group and the firms’ annual and accounting reports for the periods. In testing the specified models, all the variants of the Panel data Analysis techniques; Pooled Regression, Fixed Effects and Random Effects were employed. In addition, the prepositions of the Pooled Regression versus Fixed Effects and Random Effects versus Fixed Effects were compared using Likelihood and Hausman test respectively. The results of Pooled Regression, Fixed Effects and Random Effects found dividend per share and earnings per share significantly impacted on market value. Again, both the Likelihood and Hausman tests favour the fixed effect that the unobserved factors in firm are significant or that the correlation between observed and unobserved factors are significant. In the light of the findings, the researchers recommended among others that investors should be consistent with their dividend payment (smooth dividend payment) to attract investors. Again, this study has added to the stream of knowledge that firms should consistently pay dividends to their shareholders as a form of shareholders wealth maximization. This is a form of financial signaling or dividend announcement that will attract investors.

Corporate Governance Mechanism and Shareholders Wealth Maximization in Quoted Commercial Banks in Nigeria

This study examined the effect of corporate governance mechanism and shareholders wealth maximization of quoted commercial banks in Nigeria. The purpose is to examine how corporate governance variables affect shareholders wealth of quoted commercial banks in Nigeria. Panel data was sourced from financial statement of the quoted commercial banks from 2011 to 2020. Return on equity and return on assets were modeled as a function of board size, board composition, board independence and directors shareholdings. Panel data Ordinary least square method was used as data analysis technique. The study found that 65.7 and 70 percent of return on equity and return on assets were explained by variation in corporate governance variables. Beta coefficient of the variables found that board size and board composition have positive but no significant effect on return on equity of the quoted commercial banks while board independent and directors equity holding have negative effect on the return on equity of the quoted commercial banks. The study found that the independent variables have positive effect on return on assets of the quoted commercial banks except directors’ equity holding. From the findings, the study concludes that corporate governance variables have greater effect on return on assets than return on equity of the quoted commercial banks. From the findings, the study recommends the all corporate governance code from the regulatory authorities should well complied with by the management of the commercial banks. Directors equity holding should be reduce and its objectives integrated with the management objective of maximizing shareholders wealth

Assets Composition and Financial Performance of Listed Consumer Goods Firms in Nigeria

This study investigated the effect of asset composition on financial performance of listed consumer goods companies in Nigeria from (2012-2021). three research questions and corresponding three hypotheses were formulated for the study. Ex-post facto research design was employed in the study. The population of the study included all consumer goods manufacturing firms quoted on the Nigerian Exchange Group (NXG) (NSE) as at 31st December 2022 with a sample size of Twenty-nine (29) consumer goods manufacturing companies selected from the population sector. The study relied on secondary sources of dataset which was obtained from Annual reports of sampled companies as provided by individual companies, Nigerian Exchange Group (NXG) website and Machame Database (www.machameratios.company.site). Amongst other preliminary analysis and tests, the panel least square regression analysis was done in validating the hypotheses. The study found that property, plant and equipment have positive and significant effect on the performance of quoted manufacturing companies in Nigeria Exchange Group; Intangible assets have positive but insignificantly effect on the performance of quoted manufacturing companies in Nigeria Exchange Group; current assets has positive significant effect on the performance of manufacturing companies quoted in the Nigeria Exchange Group. Consequent on the findings of the study, it is recommended amongst others that management of manufacturing companies in the Nigeria should formulate policy that will enhance their investment in property plant and equipment as this will increase the performance of their companies and enable them achieve shareholders wealth maximization objective. The study also recommended that management of manufacturing companies in their effort to enhance the performance of manufacturing companies should increase the level of the of on intangible assets. Increasing the investment in intangible assets would positively enha

Perubahan Tarif Pajak Penghasilan, Ukuran Perusahaan Pada Struktur Modal Yang Dimoderasi Profitabilitas

A company always needs capital both for business opening and business development. The funding problem will not be separated from a company which includes how much the company's ability to meet the needs of funds that will be used to operate and develop its business. The optimal capital structure policy is where there is a good balance between risk and return which will ultimately maximize the value of the company. The company's goal of maximizing company value also means maximizing shareholder wealth. In a company that has gone public, the value of the company is reflected in the price of shares traded on the stock exchange. This study aims to determine the effect of changes in corporate income tax rates, company size on capital structure with profitability as a moderating variable. The sample in this study amounted to 26 companies with the object of trading and service companies listed on the IDX in 2019-2020 during the pandemic. Purposive sampling was chosen as the sample acquisition method. MRA is used as a sample testing selection with spss 26 as software. This study proves that capital structure cannot be influenced by changes in corporate income tax rates but company size can be influenced by profitability and company size and the results also show that changes in corporate income tax rates moderated by profitability do not affect capital structure, and weaken company size on capital structure

Achieving stability and prosperity: The Chinese way

State governance in corporations controls the economy and employment to develop prosperity in China. Does privatization achieve both objectives? Privatization theory views that giving up state control benefits firms economically but is quite silent on the value of employment benefits. However, market mix theory (Sappington and Stiglitz, J Policy Anal Manag 6(4):567–582, 1987; Stiglitz, Whither Socialism? MIT Press, Cambridge, MA, and London, England, 1994) views that state control of firms to provide employment is valuable. It further implies that corporate performance and employment objectives can co-exist well together. We formalize Market Mix Theory to reveal its testable implications on dual objectives and performance. We test the notion that Chinese corporations pursue two objectives: maximizing economic value and employment, unlike the singular objective of value maximization in Western firms. As well, we test the benefit of partial privatization. First, we test the market mix theory by studying the relationship between state ownership and employment and financial performance as a combined objective. We show that mixed firms have the highest performance in wealth maximization and employment compared to private and state-controlled firms. Second, we examine Chinese SOEs’ Employment with a large sample of 2536 public firms using panel regressions. We find that state ownership and firm employment have a positive relationship. State ownership is positively related to employment stability. Moreover, performance has a negative relationship with state ownership–employment. This result supports our over-employment hypothesis, meaning that economic performance is sacrificed to provide employment. Lastly, we show executive pay for SOE managers is positively related to employment. The employment objective is real in determining state control in Chinese corporations without conflicting to maximize shareholder wealth. Rather, the mixed form of ownership is optimal and vitally contributes overall to the stability and prosperity of China. Our formalization of market mix theory better reflects the reality of motivation, performance and benefits of partial privatization as exemplified in Chinese state-owned enterprises.

The effect of teaching multiple approaches to management on students’ subsequent investment decisions: Implications for Responsible Management Education

Responsible Management Education (RME) seeks to prepare students to address social and ecological crises via going beyond a traditional narrow understanding of shareholder wealth maximization. Past research has shown mixed results regarding the effectiveness of RME courses to change students’ subsequent behavior. We examine whether taking an RME course that teaches multiple approaches to management affects students’ subsequent investment decisions. We find that such students allocate less money to investments that focus only on financial returns without regard for social and ecological well-being, thereby counterbalancing our finding that greater investment knowledge is associated with allocating more money to such investments. Implications are discussed.

THE ROLE OF FINANCIAL MANAGEMENT IN MAXIMIZING SHAREHOLDER VALUE

This paper examines the principles of corporate finance and their impact on the maximization of shareholder value. Financial management plays a critical role in ensuring the success of a business and achieving the ultimate goal of maximizing shareholder wealth. The article discusses the concept of discounted cash flow analysis, which is a fundamental principle of finance that allows companies to evaluate investment opportunities and make sound financial decisions. In addition, the paper examines the importance of capital structure, including the use of debt and equity financing, and the effect of dividend policy on the value of the firm. The article also highlights the role of financial markets in providing necessary capital to businesses and enabling efficient allocation of resources. Overall, the principles of corporate finance are essential for any business to thrive, and understanding these concepts is crucial for financial managers to make informed decisions that maximize shareholder value.

The Effect Local Ownership, Audit Quality, Audit Committee, And Financial Performance on Company Value

Corporate value is used by management in running the business to maximize shareholder wealth. Local ownership, audit quality, audit committee, and financial performance have prospects in the future so that investors will be interested in investing. This population is in manufacturing companies that pay dividends during the period 2016 to 2021 which are listed on IDX so the sample used is 222 companies. The method used is panel data regression. Findings of local ownership, size audit, audit tenure, audit committee, total asset turnover, and return on assets have a significance on company value, on the contrary debt to assets has no significance on company value. It is suggested that companies can improve local ownership and audit quality in making corporate strategy decisions to increase company value, in addition to financial performance to maximize profits that reflect the company internally

Analisis Leverage dan Profitabilitas Terhadap Nilai Perusahaan (Studi Pada PT. Bank Panin Dubai Syariah Periode 2016-2020)

This research analysis the effect of leverage and profitability on firm value at PT Bank Panin Dubai Syariah for the 2016-2020 period. The main purpose of establishing a company is to maximize shareholder wealth. There are several factors that affect firm value, for example leverage and profitability. This study uses a quantitative approach with time series analysis. Thei results of this study indicate that leverage and profitability have no effect on firm value, while the simultaneous significance test shows that leverage and profitability have an effect on firm value. This means that companies in financing their assets tend to use their own capital (internal financing) which comes from retained earnings and share capital rather than using debt.

The Impact of Governance, Audit Quality, and Financial Performance on Increasing Corporate Value

Corporate value is the level of business achievement from the start-up to development used by management in running a business to maximize shareholder wealth so that investors can trust the company's quality. Whether governance, audit quality, and financial performance can increase corporate value. Using secondary data from the Indonesian stock exchange on the manufacturing group that distributes dividends for the 2016-2021 period, The impact of the research results found that domestic institutions, foreign institutions, individual ownership, audit size, audit tenure, TATO, ROA, and DPR are significant on corporate value, while the audit committee and NPM are not significant on corporate value. It is suggested that companies can increase audit quality and percentage of share ownership in making strategic decisions focusing on several parties involved and the role of financial performance as reflecting the company internally as a reference for business turnover.