Unlisted Companies Research Articles

Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

The present study analyzes dividends paid in unlisted family and non-family businesses, exploring factors that lead to higher or lower dividend payments. Data from 612 Spanish companies during 12 consecutive years was analyzed. This study indicates that family businesses, as a result of the greater proximity of the family to the business, pay lower dividends. However, we found evidence of higher dividends paid in pyramid structures, susceptible to higher agency costs, both in family and non-family businesses. In family businesses, this can be explained by their aim to maintain levels of trust with minority interests, and in non-family businesses by the purpose to mitigate conflicts of interest as a consequence of greater autonomy of subsidiaries. The evidence obtained adds value to the investigation, which has generally been focused on listed companies. Considering that unlisted companies use the dividend policy to align divergent interests, especially in more fragile governance structures, the results contribute to reduce the gap in research, and have practical implications for companies and investors.

Confucian culture and corporate bond pricing

We investigate the effect of Confucian culture on corporate bond pricing. Using the birthplace data of 56,759 Jinshi in the Ming and Qing dynasties to construct a proxy of Confucian culture, we find a significantly negative relation between Confucian culture and bond pricing: the stronger the Confucian atmosphere of the corporate headquarters’ location, the higher the bond rating and the lower the credit spread. This conclusion still holds after using the distance to the nearest ancient printing office as an instrumental variable and a series of robustness tests. The mechanism test shows that Confucian culture can improve the pricing efficiency of corporate bonds by fostering investors’ trust, alleviating principal–agent problems and restraining bad corporate behaviors. Moreover, the impact of Confucian culture on corporate bond pricing is greater for firms located in regions with weak legal and other formal institutional constraints and for unlisted companies. Our study complements the literature on culture and bond pricing, and provides policy insights from traditional Chinese wisdom for improving the efficiency of financial markets.

A Study on Performance of IPO (Initial Public offering) with Special Reference to Selected Companies at BSE

Debt and/or equity are two ways that corporations and government entities raise money. The primary market can be used by unlisted companies to issue shares through an initial public offering (IPO). These businesses have the chance to grow, diversify, and expand with stronger long-term business prospects. An investor who owns shares from an IPO may view it as a short-term speculative opportunity or as a long-term chance to generate big dividends and capital gains. In India, initial public offerings (IPOs) or public issues have grown in popularity as a means of obtaining capital. These initial public offerings (IPOs) have an erratic performance over time, and previous investors who invested in them have suffered significant losses. While IPOs provide noticeable returns on the day of listing, they often perform poorly over the long run. This essay evaluates how Indian companies' operational performance changes following their initial public offerings (IPOs). If a performance metric like "profit" is normalized by sales volumes (i.e., return on sales) rather than assets (i.e., return on assets), it is discovered that there is no worsening in the operating performance post-IPO. This paper discovers a steady return on sales, in contrast to a clear fall in return on assets observed in comparable other studies. The importance of selecting the appropriate variables for matching and normalization purposes is emphasized in the paper.

The impact of the disclosure characteristics of the application material on the successful listing of companies on China’s Science and Technology Innovation Board

The registration statement, the inquiry letter, and the reply letter are the main application materials for companies wanting to list on the Science and Technology Innovation Board (STAR) need to submit to regulatory agencies In this paper, we aim to study the impact of these three kinds of application materials on the successful listing of companies on STAR market in China through six text characteristics, including Words, Boilerplate, Fog Index, HardInfoMix, Redundancy, and Specificity for the first time. In the empirical analysis, we collect the registration statements and the inquiry-reply letters of 220 listed companies and 64 unlisted companies from June 13, 2019 to January 31, 2021 to perform the regression analysis. The empirical results show that, for registration statements, higher Words and Boilerplate will improve the success rate for listing, but higher Redundancy will lead to the failed listing. For the inquiry-reply letter, only the number of questions contained in the inquiry letter is negatively significantly associated with the initial public offering (IPO) success rate, while the text characteristics of the reply letter have little to do with the IPO success rate.

Listed peers' giving and corporate philanthropy: The motivations to imitate

AbstractThe impact of industrial peers' donations on firms' charitable practices has been tested and verified in existing literatures. This paper further studies the motivations and scenarios of non‐listed companies to imitate their listed counterparts in the same industry to formulate charitable policies. Deeply rooted in institutional isomorphism theory, uncertainty and professional networks are employed as philanthropic motives for unlisted companies to mimic their listed peers. Managerial decision mechanisms and network status perceptions enhance imitation by reinforcing decision uncertainty and network effect. Institutional environment heterogeneity can amplify or reduce the imitative stimulus of managers' decision mechanisms and status perceptions. Our empirical tests are based on a unique dataset of 14,873 unlisted firms and their corresponding listed counterparts in China from 2006–2016, and use Tobit regression methods. The results show a significantly positive association between listed peers' giving and non‐listed firms' donation. The peer effects are intensified when non‐listed firms' decentralized decision‐making and higher managers' status identification are present. Furthermore, when the institutional environment changes from weak to strong, the impetus of decentralized decision‐making and status identification will be weakened. These findings contribute to the corporate philanthropy literature and facilitate the development of effective corporate charity policies and government promotion of philanthropic responsibility.

Accounting Beta as an Indicator of Risk Measurement: The Case of the Casablanca Stock Exchange

The problem of determining the cost of equity is crucial to the development of organizations. It is an essential means of calculating value creation. The financial literature has proposed several models for estimating the cost of equity, such as the capital asset pricing model (CAPM). However, this model is only used for listed companies, and cannot be used for unlisted companies. To remedy this situation, alternative measures of the cost of equity have emerged, such as accounting beta. The main objective of this research was to explore the relationship between market beta and accounting beta calculated using ROA, ROE and net income to demonstrate the ability of accounting beta to measure risk for unlisted companies. To carry out this study, we exploited data from a sample of 49 companies listed on the Casablanca Stock Exchange during the period of 2015–2019. We used panel data econometrics to empirically test the research hypotheses. The results show that the accounting beta calculated using ROA and ROE significantly represents the market beta and is a satisfactory solution to calculate the cost of equity of unlisted firms. The results of the study contribute to the existing literature on the cost of capital by reinforcing the role of accounting beta as a solution for determining the cost of equity and therefore the creation of value for the organization.

External Audit Quality and Value Creation: What Relationship in the Cameroonian Context

A financial statement audit is an essential tool for reducing information asymmetry and maintaining an efficient market environment. However, if the audit strives to improve financial performance, there must be credibility and reliability. This research verifies the link between external audit quality and value creation while controlling for other exogenous factors (the size and age of the firm). Given that most research on this relationship has been carried in the context of developed countries and much more on listed companies, this study adopts a new approach to investigate the contribution of external audit in improving the value creation by unlisted companies like Cameroon. The audit quality was captured by the competence and the independence of the auditor. The creation of value is measured by the evolution of turnover and net income. Using the logistic regression analysis on data collected on a sample of 97 public limited companies in Cameroon, it is proved that audit quality has a positive and significant influence on value creation. Belonging to the Big Four, providing services other than external audit and the evolution of audit fees have no significant impact on value creation. As control variables, the company’s size does not explain value creation, but the firm’s age does. It is recommended that the management hire a competent auditor who respects the steps of the audit process to create more value. Due to the importance of having a high-quality audit, further studies should explore other external audit quality variables such as co-auditing, adherence to the audit timetable, and the time allowed for audit assignments.

Application of ALTMAN Z Score On Five Selected Industries

The research paper talks about application of Altman Z score on five selected industries. Altman Z score is a predicting tool for bankruptcy. It helps to find whether the company is in safe, grey or distress zone. The research of this tool was on five industries i.e. FMCG-Personal care, Automobile – 2 & three wheeler, Automobile – four wheeler, Airlines, and Cement. Altman score is applied on certain selected companies of the five selected. All companies in Personal care industry are in safe zone. From Airlines industry, Spice Jet and Global Vectra are in distress zone. In Automobile – 2 & three wheeler, other than Scooter's India all other companies are in safe zone. For Automobile four wheeler industry, Tata motors is in distress zone due to its past data. And Cement industry, except for India Cement and Birla Corp, all are in safe zone. Though more research in cement industry is required, Altman Z score can be applied to more industries with listed as well as unlisted companies to get more clear view about the industry.

Study on Post Listing Performance of IPO

The recent development in the stock market and the economic growth of the nation attracted many new investors across the world. This has further encouraged the capital market to get wonderful performance, especially in Primary Market through IPO. The corporate companies and the government institution raise finance through equity and/or debt. And the unlisted companies acquire the capital by issuing the shares through Initial Public Offering (IPO) in the primary market. In the recent past, in spite of having uncertainty in the various investment avenues, IPO and its post-performance have yielded a competent return. The paper focuses on analysing the performance of post-listing of IPOs in the national exchange which were listed in the calendar years 2021 and 2022. The data assembled for the research is based on secondary sources. Various statistical tools are used for conducting the research. Further, it intends to measure the value of share premiums and share pricing on listing day, as well as the IPO return's progressive increase. The study also attempts to assess if these IPOs were under-priced in the short run, as well as identify key factors that influence the short-term movement of such IPOs. The study may also bring some inputs to possible investors to decide to invest in IPOs.

Test of Evaluation of the Performance of Congolese Companies Transformed into Commercial Companies by the Method Economic Value Added (EVA)

This study tries to show the importance of measuring the performance of companies by the method of Economic Value Added (EVA: Economic Value Added). Economic value added is currently considered an effective measure for evaluating the performance of unlisted companies. Four companies were selected and their performance was measured using the EVA method for a period from 2016 to 2021. At the end of the analysis carried out, the results were as follows: net destruction of value, i.e. a negative EVA for the following companies: The National Electricity Company (NEC), The National Railway Company of Congo (NRCC) and the Commercial Company of Port and Transports (CCPT). On the other hand, a positive EVA is a creation of value for Water Distribution Company (WDC). The destruction of value is attributable to endogenous factors such as a constant deterioration in the return on the labor factor, negative operating results and low profitability of this capital employed. But also by exogenous factors including in particular the lack of good governance practices: ethics and transparency which are also essential for the achievement of performance. Transformation requires not only a new allocation of financial resources but also the search for consistency between effectiveness, efficiency and effectiveness.

The perception of Johannesburg stock exchange listed and unlisted companies relating to the wireless open access network policy direction

The perception of Johannesburg stock exchange listed and unlisted companies relating to the wireless open access network policy direction

Barriers to institutionalization of an IFRS-based model: perceptions of Portuguese auditors

PurposeIn 2010, Portugal’s newly implemented Accounting Standardization System (SNC - Sistema de Normalização Contabilística) aligned Portuguese accounting standards for unlisted companies with International Financial Reporting Standards (IFRS). The purpose of this paper is to explore the influence of the local context and the role of auditors in the institutionalization of this IFRS-based model in Portugal.Design/methodology/approachDrawing from an institutional theory framework, the authors interviewed 16 Portuguese auditors in 2017 (seven years after formal implementation of the SNC) to determine their perceptions on whether barriers to the IFRS-based model persisted.FindingsThe authors reveal that the code-law institutional logic embedded in the Portuguese context is hindering full institutionalization of the new accounting model. Some persisting barriers to implementation reflected a decoupling between formal requirements and actual practices. Despite these barriers, there has been an encouraging institutionalization of SNC. The authors reveal a high level of commitment of auditors. They draw attention to the engagement of auditors in the institutional work that is intended to assist in SNC implementation, and their role as promoters of a power-knowledge discourse in propagating IFRS institutional logics at the national level, namely, through the justification and rationalization of the reported institutional contradictions.Practical implicationsThe highlighting the authors provide of problems related to accounting change should assist international regulators, the Portuguese standard-setter and professional accounting associations to devise appropriate strategies to promote IFRS-based accounting systems implementation.Originality/valueThe authors contribute to the skimpy literature on micro institutional analysis and encourage further exploration of the dynamics between the micro and macro levels of analysis in institutional research.

Profitability Determinants of Unlisted Renewable Energy Companies in Germany—A Longitudinal Analysis of Financial Accounts

The fight against a climate crisis has urged nations and the global community to cut emissions and to define ambitious environmental goals. This has highlighted the importance of the renewable energy (RE) industry. Germany has been one of the most active countries in RE adoption. In this vein, the purpose of this research is to study and identify key profitability determinants of unlisted German electricity-producing RE-companies, many of which have been supported by the German Feed-in Tariff (FIT). A multi-year analysis based on panel data from 783 companies for the years 2010–2018 is used. The results show that both company- and industry-specific profitability determinants are statistically significant, but the company-specific determinants seem to be more important. The results shed new light on what drives the profitability of private German RE companies during the period of financial aid from the government and are of use to managers, regulators and investors alike, e.g., when the effects of different regulatory climates and industry environments, as well as states of business life cycle are considered. Furthermore, the implications of this study have wider environmental and economic importance as the performance of the RE companies is critical in achieving the emission targets of the energy industry and ensuring a more sustainable energy production for the future.

Listing and Value: A Cross-Country Analysis in the Energy Sector

The study aims to fill a gap in the literature on the impact of listing on value. Most of the relevant literature analyzes the impact of listing by focusing on the financial performance of companies. The innovative aspect of this study lies in considering value as a combination of return on equity and risk profile, the latter reflected in the cost of capital. So, in this analysis value is ascertained with the ROE-ke measure. We compare listed companies vis-à-vis their unlisted peers in the energy sector. Data are extracted from Amadeus and covers the period from 2015 to 2017. The empirical investigation considers the following areas: profitability (ROE); cost of equity (ke) and value (ROE-ke). We observe statistically significant differences between listed and unlisted companies. In particular, listed companies show lower cost of equity but they also have lower profitability than unlisted companies. Furthermore, results highlight that listing has a negative impact on shareholder value: listed companies have negative ROE-ke or they register less ROE-ke if compared with unlisted peers. This research has several limitations, for example, having considered a relatively short period of time. Future developments of this work may overcome some limitations by taking into account more recent years and using additional variables such as governance, financial structure, operations in the renewable energy sector, size.

The Impact of Intangibles on the Corporate Profits of Unlisted Companies

본 연구는 비상장기업의 무형자산성지출이 기업이익에 어떠한 영향을 주는지를 분석하는 데 있다. 분석의 결과를 요약하면 다음과 같다. 첫째, 무형자산성지출이 매출총이익에 미치는 영향을 분석한 결과에 의하면 연구개발비, 교육훈련비, 광고비가 매출총이익에 유의한 양(+)의 영향을 주는 것으로 분석되었다. 무형자산성지출이 기업의 영업수익인 매출액과 가장 밀접한 관련이 있는 이익인 매출총이익에 긍정적인 영향을 주는 것으로 나타났다. 둘째, 무형자산성지출이 영업이익에 미치는 영향을 분석한 결과에 의하면 연구개발비는 영업이익에 유의한 양(+)의 영향을 주는 것으로 나타났지만, 교육훈련비와 광고비는 영업이익에 유의한 음(-)의 영향을 주는 것으로 분석되었다. 무형자산성지출 중 연구개발비는 영업이익에 긍정적인 영향을 주는 것으로 나타났지만, 교육훈련비와 광고비의 경우 매출총이익과의 분석과는 상이한 결과를 보여주고 있다. 셋째, 무형자산성지출이 당기순이익에 미치는 영향을 분석한 결과에 의하면 연구개발비와 교육훈련비는 당기순이익에 유의한 음(-)의 영향을 주는 것으로 나타났고, 광고비는 당기순이익에 영향을 미치지 않는 것으로 분석되었다. 연구개발비와 교육훈련비는 매출총이익과의 분석과는 상이한 결과를 나타냈다. 이상의 분석결과에 의하면 비상장기업의 경우 무형자산성지출이 이익의 유형에 따라 미치는 영향이 상이한 것으로 분석되었다.

The challenge of performance in the governance of local authorities in Morocco: Issues and perspectives

Empirical studies have shown that board characteristics influence the choice of capital structure in listed and unlisted companies. This paper aims to add to the existing literature on corporate governance and capital structure decisions in listed companies in Morocco by examining the relationship between board characteristics and capital structure. The paper uses a panel of data from 53 Moroccan nonfinancial listed companies from 2015 to 2019. In order to properly examine this relationship, correlation analysis and multiple linear regression (OLS) are performed between the dependent and independent variables. This study found that the percentage of female board members, the size of the board of directors as well as company-specific variables such as asset tangibility and company size have a significant influence on capital structure decisions. However, the empirical results of the relationships are only statistically significant in the case of board size and the proportion of women on the board. While the presence of independent directors and CEO duality show no effect on capital structure. It is clear from the study that corporate governance structures influence the financing decisions of listed Moroccan firms. However, this study has limitations that could lead to future research in terms of choice of variables and statistical method.

Assessment of a failure prediction model in the European energy sector: A multicriteria discrimination approach with a PROMETHEE based classification

This study presents the implementation of a non-parametric multiple criteria decision aiding (MCDA) model, the Multi-group Hierarchy Discrimination (M.H.DIS) model, through the application of an outranking MCDA approach, namely the PROMETHEE II, on a dataset of 114 European unlisted companies operating in the energy sector.Firstly, the M.H.DIS model has been developed following a five-fold cross validation procedure to analyze whether the model explains and replicates a two-group pre-defined classification of companies in the considered sample, provided by Bureau van Dijk's Amadeus database. Since the M.H.DIS method achieves a quite limited satisfactory accuracy in predicting the Amadeus classification in the holdout sample, the PROMETHEE II method has been performed then to provide a benchmark sorting procedure useful for comparison purposes.The analysis indicates that in terms of average accuracy, M.H.DIS model development with the PROMETHEE based classification provides consistently better results than the ones obtained with the Amadeus classification in most of combinations, which have been built with the financial variables covering the main firm’s dimensions such as profitability, financial structure, liquidity and turnover. The better results of the proposed model in terms of accuracy rate are also confirmed by the comparison to the most three applied machine-learning methods.

Using of the Circularity Indicators in the Financial Communication of Listed Companies in the Construction Industry

Purpose: The Building and Public Works sector is experiencing remarkable growth due to the increase in infrastructure needs. Because it is one of the most waste-generating sectors. This growth will explode in the coming years, especially with a linear economy model. Thus, the transition to a circular economic model is necessary and financial communication practices must be aligned with it. Under this objective, this paper seeks to explore the financial communication practices of listed companies in terms of circular economy. Design/Methodology/Approach: The annual reports of seven (7) Moroccan construction companies listed on the Casablanca Stock Exchange were analyzed and discussed in the light of theoretically approved circularity indicators. Findings: The content disseminated by the listed construction companies through their annual reports in relation to the circular economy is often limited to the description of broader actions. Some listed companies communicate numerical indicators particularly in relation to energy and water consumption, recycling and recovery of waste, substitution of natural resources by alternative materials. Practical implications: This paper is a benchmarking tool for listed and unlisted companies in the construction sector, with the aim of improving the quality of the indicators disseminated and increasing the environmental performance of companies.

The impact of corporate governance and IFRS on the relationship between financial reporting quality and investment efficiency in a continental accounting system

PurposeThe purpose of this paper is to investigate whether Financial Reporting Quality (FRQ), Corporate Governance and IFRS affect investment efficiency of French listed companies.Design/methodology/approachBased on a sample of 125 French firms listed on the CAC All Tradable index between 2008 and 2017, the study uses Feasible Generalized Least Squares (FGLS) regressions to examine the relationship between FRQ and firms' investment efficiency.FindingsThe findings show that FRQ plays a role in reducing overinvestment and does not affect underinvestment, suggesting that in a code-law country, informal and personal relationships tend to replace the role of financial reports in mitigating information asymmetry. The results also reveal that the relationship between FRQ and investment efficiency increases with better corporate governance and with the implementation of IFRS. However, the results provide no evidence between incentives to minimize profits for tax purposes and firms' underinvestment and continues to be negative for overinvesting companies that have more incentives to manage their earnings for tax purposes.Research limitations/implicationsOur study has some limitations. First, we only examine listed firms, so the results cannot be generalized to unlisted companies that represent the vast majority of French economic activity. Second, this research does not distinguish between government companies and private companies. The two types of companies have different governance mechanisms, financial reporting, disclosure environment and concentration of ownership.Practical implicationsThis study suggests that in a code-law country with weak investor protection, FRQ acts as a governance mechanism by mitigating asymmetric information and improving firms' investment decisions.Originality/valueThe relationship between FRQ and investment efficiency has been widely examined for companies in “common law” countries. This study extends the scarce evidence of this relation to companies in a code-law country. It also builds on previous research by introducing new factors never discussed before that could change this relationship, namely corporate governance, IFRS implementation and tax purposes.

The application of proxy methods for estimating the cost of equity for unlisted companies: evidence from listed firms

The Campbell and Vuolteenaho (Am Econ Rev 94(5):1249–1275, 2004) two–beta model decomposes the systematic risk in the sensitivity of cash flow and discount rate change. We employed this model, which we call the Two Beta Decomposition Model (TBDM) and found that this model is useful to compute the cost of capital for unlisted companies (UCs) via a proxy from listed companies. This model includes not only the accounting return reaction to long-term changes in consumption, but also links fundamental reactions to temporal changes in risk aversion. We test this model along with three traditional alternatives that are potentially useful in computing the cost of equity for UCs: accounting betas (AB), unlevered betas (UB), and operational betas (OB). Our results show that AB, UB and TBDM can partially explain the cross-sectional variations of stock returns. Additionally, using a series of non-parametric ranking test along with several statistics of goodness of fit, we found that the TBDM is the model that produces the best fit among competing models followed by the UB which is currently the most used among proxy methods.