A Study on the Impact of CSR Activities on Firm Value : Focused on the Moderating Effect of CSR Relevance

PurposeThe objective of this paper is to investigate the impact of risk disclosures on firm value. We further investigate whether effective governance moderates the relation between risk disclosures and firm value.Design/methodology/approachWe use a sample of the top 200 Indian listed firms on NSE from 2013 to 2018. The generalised method of moments (GMM) along with the ordinary least square (OLS) is used to investigate our research problem. Further, we use the Propensity Score Matching (PSM) technique and the Heckman selection model for correcting selection bias in the robustness section.FindingsWe find that higher risk disclosures result in lower firm value. Besides, we show that better governance minimizes the negative impact of risk disclosures on firm value. This finding encourages firms to have a good governance mechanism to mitigate the adverse effects of risk disclosures in public.Originality/valueThe main contribution of our paper is to examine the moderating effect of governance between risk disclosures in the annual report and firm value (market-based and accounting-based) in the context of an emerging economy. Moreover, the paper highlights the potential moderating effect of independent directors and resourceful boards on the risk disclosures and firm value in the Indian context.

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Impact of corporate tax aggressiveness on firm value: evidence from India

Managerial Finance ◽

10.1108/mf-01-2021-0033 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Taruntej Singh Arora ◽

Suveera Gill

Keyword(s):

Corporate Governance ◽

Emerging Economies ◽

Firm Value ◽

Fixed Effects ◽

Negative Relationship ◽

Moderating Effect ◽

Corporate Tax ◽

Content Type ◽

Tax Aggressiveness ◽

The Impact

PurposeThere is mixed evidence in the extant literature on the firm value implications of corporate tax aggressiveness in the developed economies. There are, however, limited studies that discuss this relationship in the case of emerging economies. The present study aims to bridge this research gap by exploring the relationship between corporate tax aggressiveness and firm value in context of the Indian economy.Design/methodology/approachThe sample comprises 547 S&P BSE 500 (Standard and Poor's Bombay Stock Exchange 500) Index companies for Financial Year (FY) 2009–10 through FY 2018–19. A fixed-effects panel model has been used to discern the impact of corporate tax aggressiveness on firm value with and without the moderating effect of a proxy for corporate governance strength.FindingsThe results highlight a significant negative relationship between corporate tax aggressiveness and firm value in India, whilst the analysis on the moderating effect of corporate governance strength on this relationship revealed a mix of significant and insignificant results. These results were robust to an alternate specification of the corporate governance strength proxy, the system GMM estimation employed to deal with endogeneity and a change in the Corporate Social Responsibility (CSR) regulation brought into effect by the Companies Act, 2013.Originality/valueThe study reveals a firm value discount associated with corporate tax aggressiveness in India which is likely due to its ability to increase opportunities for wealth expropriation by managers. This can further be attributed to the ineffective corporate governance mechanisms that make agency problems more severe in the case of emerging economies like India.

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Income smoothing and firm value in a regulated market: the moderating effect of market risk

Asian Journal of Accounting Research ◽

10.1108/ajar-08-2020-0072 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Segun Abogun ◽

Ezekiel Aiyenijo Adigbole ◽

Titilope Esther Olorede

Keyword(s):

Firm Value ◽

Generalized Method Of Moments ◽

Market Risk ◽

Moderating Effect ◽

Income Smoothing ◽

Share Price ◽

Security Market ◽

Content Type ◽

The Impact ◽

The Relationship

PurposeThis study aims to examine the impact of income smoothing on the value of firms in a regulated security market, moderated by market risk. This is based on the prevalence of accounting scandals resulting in the collapse of firms which has been attributed to the opportunistic behaviors of managers.Design/methodology/approachThe ex post facto research design was employed, and as such, data were gathered from secondary sources. The quantitative approach was also used in the study. Furthermore, the system generalized method of moments (Blundell–Bond) panel estimation technique was used for analyzing the data. Income smoothing was measured using the accrual based methods, while firm value was measured using share price.FindingsThe study found that income smoothing has a negative significant impact on firm value. The study also revealed that market risk is a significant variable that defines the relationship between income smoothing and firm value.Originality/valueTesting the moderating effect of market risk on the relationship between income smoothing and firm value is unique to this study, particularly from a regulated security market and emerging economy.

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