Enterprise Value Research Articles

New energy products going global: The impact of digital transformation amid trade frictions

New energy industry is the key field in which China has suffered from trade frictions. It remains to be explored whether digital transformation can enhance export resilience and alleviate the negative shock of trade frictions. Based on the export data of new energy products, this paper uses a panel two-way fixed effects model to explores whether digital transformation can alleviate the negative shock of trade frictions on the exports of new energy products. We find that (1) trade frictions lead to an average decrease of 11.45% in the export value of new energy enterprises and an average increase of 0.84% in the probability of exiting the export market. (2) Digital transformation can buffer the negative shock of trade frictions. For enterprises undergoing digital transformation, the negative shock of trade frictions on exports are relatively limited. (3) Mechanism test indicates that digital transformation accelerates the export products conversion and export markets transfer, thereby alleviating the negative shock of trade frictions. From the digital transformation perspective, this paper provides targeted policy implications for enhancing the export resilience of new energy enterprises and forming a sustained buffering mechanism to alleviate trade friction shocks.

Long-Term Impact of Mergers and Acquisitions on Firm Performance: A Panel Data Study

Purpose - This study aims to examine the long-term impact of mergers and acquisitions (M&As) on firm performance, particularly within the pharmaceutical industry. Using a panel data regression model, the study assesses how key financial ratios such as Net Profit Margin, Return on Capital Employed (ROCE), Debt to Equity Ratio, and Enterprise Value influence postmerger firm performance over time. Design/methodology/approach - A panel data approach has been conducted using data from 10 pharmaceutical companies from their post-merger period, focusing on the effects of M&As on firm performance as measured by Net Profit Margin. Financial ratios related to profitability, liquidity, and valuation were used as independent variables. Findings - The study finds that M&As have a positive long-term impact on firm performance, particularly in companies with strong Earnings per Share (EPS), efficient capital management, and good liquidity. ROCE, Debt to Equity Ratio, and Current Ratio were significant predictors of improved Net Profit Margin, highlighting the importance of financial efficiency and debt management in the post-merger phase. Research limitations/implications - The focus on the pharmaceutical industry limits the generalizability of the findings to other sectors. Future studies should examine a broader range of industries to better understand the effects of M&As across different contexts

The Impact of ESG on Corporate Performance: A Case Study of Yunnan Baiyao

Abstract: With the deepening integration of the global economy and the widespread acceptance of sustainable development principles, Environmental, Social, and Governance (ESG) factors have become critical elements influencing long-term value and financial performance of enterprises. Globally, an increasing number of companies are paying attention to ESG factors and integrating them into their strategic planning and operational management. This paper employs case study analysis and accounting-related indicators analysis to evaluate the ESG practices of selected enterprises from the dimensions of environment, society, and governance. It then combines financial indicators to analyze the impact of ESG on their financial performance and the reasons behind it. Finally, suggestions are made on how to achieve sustainable development through improved ESG management.

Influence of Growth, Capital Structure, Profitability, and Size on FTSE 100 Enterprise Value

Influence of Growth, Capital Structure, Profitability, and Size on FTSE 100 Enterprise Value

The effect of intellectual capital and venture capital on enterprise values: evidence from China

The effect of intellectual capital and venture capital on enterprise values: evidence from China

Impact of Capital Structure Optimization on Enterprise Value

Impact of Capital Structure Optimization on Enterprise Value

Capital Structure and Its Effect on Firms Value and Competitiveness in the Market: The BBBY Example

After covid-19, almost every industry is competitive. Choosing an optimal capital structure can directly determine a firms survival. This paper mainly investigates how capital structure impacts a firms enterprise value and its competitiveness in an industry, focusing on Bed Bath & Beyond (BBBY) as a case study. This paper mainly integrates insights from different economic theories and other researchers empirical research results to analyze how BBBYs conservative capital structure characterized by substantial cash holdings and minimal debt affects its firm value and competitiveness stance. The finding suggests that even though BBBYs conservative capital structure (holding large amounts of cash and almost no debt) ensures stability, it potentially reduces its firm's value and limits market responsiveness for three reasons. First, holding large cash is wasteful and has a large opportunity cost. Second, having no debt would lose the opportunity of taking advantage of the tax benefit that debt brings. Third, the conservative structure would potentially cause shareholders dissatisfaction. And increasing a reasonable amount of debt and controlling cash holding can enhance BBBYs strategic flexibility and competitiveness edge.

The Impacts of Coaching on Innovative Food Business Performance: A Study of Indonesian Entrepreneurship Development Program

Business coaching has emerged as a prominent tool for enhancing organizational performance and individual development. Relying on the Goal-setting theory, this article uses qualitative method to provide an empirical study about the impacts of the GROW (Goals, Reality, Options, and Will) model of business coaching on product development, managerial improvement, and fulfilment of legal aspects on top of financial aspects for Indonesian micro and small food businesses. The study was conducted based on the results of the Indonesian Food Innovation (IFI) coaching program; an entrepreneurship development activity initiated by the Indonesian Ministry of Industry. The data in this study was gathered from the tracery study carried out by the IFI committee. Conducting an experiment method using comparative of pre- and post-activities, this research compares the participants’ business performance before vs. after coaching intervention, this study finds evidence of the significant positive impacts of business coaching on enhancing business performance, such as sales value and business valuation. The success of an entrepreneurship development program is determined by the insight into vital issues that are specifically often faced in a particular industry. Therefore, entrepreneurship development programs need to be customized according to the industry.

Is Capital Structure Irrelevant with ESG Investors?

Abstract This paper examines whether capital structure is irrelevant for enterprise value and investment when investors care about environmental, social, and governance issues, which we refer to as “ESG-Modigliani-Miller” (ESG-MM). Theoretically, we show that ESG-MM holds with linear pricing and additive ESG. ESG-MM means that issuing low-yielding green bonds does not lower the overall cost of capital because it makes the issuer’s other securities browner. Hence, a firm’s incentive to make a green investment does not depend on its financing choice. We provide suggestive evidence of failure of ESG-MM, implying that firms and governments can exploit inconsistent ESG attribution or segmented markets. (JEL E22, G12, G32, G4, H23, Q56)

The Impact of Accounting Measurement on the Financial Reporting

This article provides an in-depth discussion of the impact of accounting measurement on financial reporting. After confirming the centrality of accounting measurement in financial reporting, the article analyses the impact of accounting measurement on corporate financial reporting in four accounting items: intangible assets, R&D, goodwill and pensions. The study points out that the assessment of enterprise value and stability can be significantly affected by improper measurement of intangible assets. Accurate R&D accounting measurement is essential for financial report users to reveal the true value and potential earnings of a business. Goodwill arises mainly from accounting for business combinations or mergers and acquisitions, and accurate measurement is an important basis for business risk assessment and strategic planning. Pension accounting measurement affects the prediction of future cash flows of enterprises, and therefore has an impact on the users of financial reports, especially on investors. This paper demonstrates, through five case studies, the use of accounting measures for the above four accounting subjects in actual financial reporting and their specific impact on decision makers. In conclusion, the accuracy of accounting measures plays an indispensable role in improving the transparency and comparability of financial reporting and can have a decisive impact on the decisions of investors and other stakeholders.

Impact of Equity Liquidity on Corporate Value—— Based on The Empirical Analysis of China's A-Share Listed Companies

Since the establishment of the Shanghai and Shenzhen Stock Exchange, China's stock market has experienced a development process from scratch, from small to large, and from weak to strong. During this period, the liquidity of China's stock market has increased significantly. The stock market can affect the real economy by changing the motivation and influencing the behavior of enterprises, which is crucial to economic development. Many scholars at home and abroad have studied the impact of stock liquidity on enterprise value from different perspectives. This paper finds that the stock liquidity has a significant positive impact on the value of enterprises. The higher the level of stock liquidity, the higher the enterprise value, and the company's equity structure can play a role as an intermediary variable in the process of stock liquidity affecting the enterprise value.

Analysis of Earnings Quality and Enterprise Valuation of Microsoft by Earnings Quality and Residual Income Model

Artificial intelligence has had a remarkable influence in recent years and has developed many revolutionary solutions in many industries. OpenAI’s ChatGPT is one of the most popular products in this trend. As the largest stockholder of OpenAI, Microsoft has committed itself to integrating artificial intelligence into its primary products, like Microsoft Office and Azure. Although Microsoft experienced a continuous slump in stock in 2022, Microsoft’s current stock price has broken through $400 per share. This paper aims to conduct a financial analysis and forecast Microsoft’s future growth to figure out Microsoft’s intrinsic value. This article uses earnings quality analysis and residual income model to evaluate Microsoft’s financial performance and conduct valuation. Microsoft’s Cash Conversion Cycle has become negative since 2021, so Microsoft can reinvest the cash it receives from sales before using it to pay suppliers. The present value of the continuing value in the Residual Income Model indicates that Microsoft is undervalued compared to the current stock price. Economic conditions and the global supply chain will also influence investors’ expectations, except for quantitative factors. Therefore, Microsoft's stock price fluctuates and does not exceed the forecasted price. This article offers some insights on Microsoft and relevant industry valuation analysis.

Enterprise value and risk taking in the banking industry: Cooperatives vs. corporations

This study leverages on a quasi-natural experiment to shed light on the relative merit of the cooperative versus the corporate form. In Italy, a new law forced some cooperative banks to turn into joint stocks banks. This change of ownership structure proves to be Pareto improving for all financial claimholders since it either increases or leaves the value of equity and debt of any seniority unchanged, while reducing the market-based metrics of risks. This evidence challenges the view that the demutualization increases the asset substitution risk, transferring wealth from bondholders to shareholders and heightening the firm risk profile. Therefore, a transition from a cooperative to a corporate form should not cause stability concerns in the banking industry.

Exploring production of social and economic value in social enterprises through a business model framework

AbstractThis study explores how social enterprises create social and economic value through business models that support ex‐offenders. The work was motivated by a request for help from an entrepreneur wishing to establish a business that supports ex‐offender rehabilitation. The research explored five case organisations that already provided such support, analysing them through a business model framework. The case studies investigated the dual propositions of social and economic value created using various organisational forms, including private companies, charities, and a government body. Findings demonstrate how each organisation utilised under‐valued human resources to address social challenges while maintaining economic viability. The research contributes to social enterprise literature and practice, showing the integration of social and economic value creation, exploring the role of Mission, and explaining the reluctance of some organisations to engage in social value measurement. The findings offer insights to entrepreneurs seeking to sustainably deliver social impact.

Investing in people, not in products: how age, gender, ethnicity, and attractiveness of entrepreneurial teams influence the decision-making of angel investors in Germany

AbstractThe high-risk decision environment and information asymmetries associated with investing in early-stage startups in pitch competitions make angel investors prone to biased decision-making. Drawing from social perception theory, this study examines how angel investors’ decisions are influenced by observed personal characteristics of entrepreneurial teams, based on representative stereotypes. Analyzing a dataset of N = 553 startup pitches from the German televised competition Die Höhle der Löwen, this study reveals that the likelihood of securing deals with German angel investors and the resulting business valuations are linked to certain superficial team characteristics. Specifically, the age, diverse ethnicity, and physical attractiveness of the entrepreneurial team have a significant positive effect on deal probabilities. Moreover, angel investors offer lower deal valuations to teams of older and female entrepreneurs, suggesting the presence of a systematic bias. These insights contribute to understanding the role of stereotypes in entrepreneurial finance and address the challenges related to bias in access to capital for early-stage startups in Germany.

Urban eco-efficiency of China: Spatial evolution, network characteristics, and influencing factors

Urban eco-efficiency (EE) refers to the ability of a city to balance economic growth with environmental protection through the optimal use of resources and environmental management, reflecting the city’s performance in sustainable development. Quantitative EE analysis is a crucial evaluation criterion for measuring the process of sustainable development (SD). To assess the current state of sustainable development in China, this study employs the slacks-based super efficiency model (Super-SBM) to measure the the urban eco-efficiency in China (CUEE) of 284 cities. The study utilizes Kernel Density Estimation (KDE) and Spatial Autocorrelation Analysis (SAA) to investigate the fundamental patterns of CUEE in terms of inter-city differences and relationships. Complex Network Analysis (CNA) and Link Prediction methods are applied to examine the characteristics and future trends of the CUEE network. Additionally, Geodetector and Geographically Weighted Regression (GWR) are used to analyze the influencing factors of CUEE. The findings are as follows: Overall CUEE is relatively low but shows a steady increase. The spatial association network of CUEE is becoming more complex, with increasing association strengths. The Chengdu-Chongqing Economic Circle (CCEC) is expected to further enhance its spatial association strength and may emerge as a new core area. The effectiveness of the interactions among selected factors is greater than that of individual factors. Degree centrality (X1) is identified as a core explanatory factor influencing CUEE, showing a positive correlation with CUEE. Scientific expenditure (X5) is also positively correlated with CUEE. Local fiscal budget expenditure (X3), industrial output value of foreign-invested enterprises (X7), and total cargo transportation volume (X9) are negatively correlated with CUEE. The analytical framework and research conclusions of this study offer valuable insights into the development of urban ecological efficiency in China and provide constructive recommendations for promoting sustainable urban development.

Responding to green finance with emission reduction and value-added: The role of enterprise environmental investment

Responding to China’s green finance policy with enterprise environmental investment (EEI) constitutes a crucial link in achieving environmental governance objectives, exerting crucial influence on the nation’s green transformation and high-quality development. Taking the pilot policy of China’s Green Finance Reform and Innovation Experimental Zone (GFRP) in 2017 as a quasi-natural experiment, this study systematically evaluates the effect of GFRP policy on the decisions of EEI and further explore whether the investments are used for passive end-of-pipe treatment (EOP) or positive source prevention (SP) by using firm-level data. The results indicate that GFRP policy can significantly promote EEI, and mainly reflected in SP, rather than EOP. Through potential mechanism analysis, it can be concluded that GFRP policy facilitates EEI by alleviating financial constraint, reducing agency cost, and enhancing environmental information disclosure. Heterogeneity analysis suggests that there exists asymmetry in policy effects, with greater impacts in high green finance development areas, low concentration industries and large-scale enterprises. Furthermore, micro-level performance consequences examination reveals that the enterprises’ decision to increase EEI under GFRP policy not only effectively realizes energy conservation and emission reduction but also contribute to facilitating enterprise value, to achieve green transformation. This study holds significant policy implications, providing empirical evidence to policymakers for the refinement and dissemination of green finance policy, and offering valuable insights for enterprise investment and management decisions.

Pengaruh Profitabilitas Leverage dan Kebijakan Dividen Terhadap Nilai Perusahaan Sektor Pertanian yang Terdaftar di Bursa Efek Indonesia Periode 2018-2022

This research examines the effect of profitability, leverage and dividend policy to enterprise value of agricultural sector listed on Indonesian stock exchange. The research type is associative with quantitative approach. The sampling metode is purposive sampling which resulted 12 samples of company from 2018-2022 period. To answer the hypothesis in this research used multiple linear regression of panel data that analys with E-Views version 12. This research findings show that profitability (return on equity) have significant and positive effects on enterprise value. Whereas leverage (debt to equity ratio) and dividend policy (dividend payout ratio) doesn’t have effects on enterprise value. In investation need to be noticed carefuly for analys the performance from a company by seeing the value of profitability, leverage and dividend policy for increase enterprise value so able to give the advantage for the investor or stakeholders.

Prioritization of the IT Sector in the CEE Stock Markets: Investment Policies, Trends and Hidden Gems

Objective: The main purpose of the research is to show that the Central and Eastern European (CEE) market is an essential component of the global stock market. It displays similar patterns to developed countries, and there is a special emphasis on information technology. Research Design & Methods: The study is supported by various machine learning methods and economic analysis, in addition to using Python and R packages. In order to gain a more comprehensive insight into the developments in CEE-region trends, the paper considers a comparative portfolio that focuses on German business, and there is a simulation of the incorporation of the Ukrainian IT sector. Constructing a business strategy in accordance with the Fama–French approach is boosted by incorporating neural networks. Findings: An examination of the performance of Czech, Polish, and Hungarian firms on the stock exchanges suggests that the investment policy oriented towards software is a reasonable choice. The results yielded by the IT companies unmistakably reveal the substantial benefits of their stock market ventures, as well as indicating the ongoing trend of investor reliance. The problem of IT business valuation is highlighted as one of the pitfalls of investing. Implications & Recommendations: The research proposes that maintaining a priority focus on IT, even in challenging circumstances, ensures steady regional advancement. Contribution & Value added: This research brings a unique emphasis to the status and outlook of the IT sector, contributing to the existing toolkit, even in the face of repeated crises.

Profitability Indicators: Critical Analysis and Applicability in Modern Conditions

Constant variability of the external environment is one of the key features affecting the business activity of domestic organizations and generates the need for constant updating of managers’ professional skills. The issues of assessment efficiency of commercial companies are always relevant not only for owners, but also for managers, employees and other stakeholders. In the conditions of economic instability, the interest to the indicators of organizations’ efficiency increases and, accordingly, their clarification and adjustment is required. and adjustment. The purpose of the study is to summarize the profitability indicators depending on the goal-setting of the participants of commercial organizations and to establish the possibility of using these indicators to assess the effectiveness of the company’s activities. Many years of experience of the authors of this article in the field of business valuation allowed to systematize the techniques of calculation of the main profitability indicators, to present an updated system of their grouping, as well as to classify the factors affecting them. Also, theoretical approaches to the calculation of invested capital were generalized in the course of the work. The research applied the methods of analysis, comparison, synthesis, classification, collection and generalization, logic, graphical and tabular display of information. Theoretical significance of the obtained results consists in the development of the methodology of value-oriented management in order to actualize and adapt the algorithms for calculating profitability indicators to domestic conditions, taking into account the interests of the participants of the organization. The practical significance of the work consists in the development of methods for assessing the performance indicators of the company, which can be used in the corporate governance of commercial structures, as well as in making management decisions by stakeholders.