scholarly journals Information Content of Earnings Opacity on Firm Value

2018 ◽  
Vol 8 (1) ◽  
pp. 410
Author(s):  
Omar Camara
Keyword(s):  
Panel Data ◽  
Capital Market ◽  
Firm Value ◽  
Time Trend ◽  
Balance Sheet ◽  
Equity Markets ◽  
Market Value ◽  
Two Dimensions ◽  
Data Set ◽  
The Impact

This study use a panel data set of balance sheet and income statement of US firms within manufacturing and services industries for the period 1987-2015 to examine the impact of two dimensions of earnings opacity on firm value – earnings aggressiveness (i.e. measured by accounting accruals) and earnings smoothing (i.e. measured by the correlation between accruals and operating cash flows). Specifically, the paper investigate if earnings opacity affects equity markets and if there is a differential effect of earnings opacity on equity markets across manufacturing and services industries. Information asymmetry in contract theory and economics expound on the positive role of information in averting price disequilibrium in the capital markets and a potential capital market failures due to an imbalance in accessing information. A capital market sufficiently characterized by efficiency and informational symmetry is expected to embody distinctive qualities in facilitating accurate interpretation of market relevant information and a subsequent timely re-evaluation of prior equity valuations. The empirical results of these panel data tests, after controlling for key influencers on equity price, shows that on average, an increase in earnings opacity is linked to an increase in market value for firms within the manufacturing industry. In contrast, the results shows that on average, an increase in earnings opacity leads to a decrease in market value for firms within the services industry. Furthermore, the results suggest that firms utilize both dimensions of earnings opacity in a sustained manner as implied by the coefficients on time-trend and the interaction of time-trend and earnings opacity.

The effect of the 2018 Giro d’Italia on Israel’s tourism firm value

2019 ◽  
Vol 25 (7) ◽  
pp. 1070-1083 ◽  
Author(s):  
Juan Luis Nicolau ◽  
Abhinav Sharma ◽  
Tal Zarankin
Keyword(s):  
Conceptual Model ◽  
Firm Value ◽  
Market Value ◽  
The Impact ◽  
First Time

On September 18, 2017, the organizers of the 2018 Giro d’Italia announced that for the first time in its history, this world famous event would begin outside of Europe—in Israel. This article contributes to the literature by taking advantage of this unique opportunity of analysis; in particular, it tests the effect that this announcement had upon Israeli tourism companies’ market value. The results show that on the very same day the announcement was made, there was an increment in the firm value of these companies. We propose a conceptual model and argue that the hype generated helps enhance the country’s image, leading to higher expectations of incoming tourism. This article presents a contribution to the growing evidence regarding the impact of such announcements upon actual market value of tourism companies.

The Impact of ICT Investment on Establishment Productivity

2003 ◽  
Vol 184 ◽  
pp. 99-110 ◽  
Author(s):  
Thomas Zwick
Keyword(s):  
Panel Data ◽  
Unobserved Heterogeneity ◽  
Data Set ◽  
Omitted Variable Bias ◽  
Lagged Effects ◽  
Variable Bias ◽  
Employee Characteristics ◽  
The Impact ◽  
Establishment Panel Data

This paper finds substantial effects of ICT investments on productivity for a large and representative German establishment panel data set. In contrast to the bulk of the literature also establishments without ICT capital are included and lagged effects of ICT investments are analysed. In addition, a broad range of establishment and employee characteristics are taken account of in order to avoid omitted variable bias. It is shown that taking into account unobserved heterogeneity of the establishments and endogeneity of ICT investments increases the estimated lagged productivity impact of ICT investments.

Comparing the informativeness of sustainability disclosures versus ESG disclosure ratings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Li Li Eng ◽  
Mahelet Fikru ◽  
Thanyaluk Vichitsarawong
Keyword(s):  
Information Content ◽  
Firm Value ◽  
Stock Price ◽  
Market Value ◽  
Content Type ◽  
Company Valuation ◽  
Incremental Information ◽  
The Impact ◽  
Different Sources ◽  
Practical Implications

Purpose The purpose of this paper is to examine the impact of sustainability disclosures and disclosure ratings on firm value. This paper compares the informativeness of sustainability disclosures in company reports versus environmental, social and governance (ESG) disclosure ratings. The authors examine the extent to which they provide incremental information. Design/methodology/approach The sample consists of panel data from over 2,600 publicly-listed non-financial US companies for the period 2014–2018. The authors obtain sustainability disclosures from Sustainability Accounting Standards Board (SASB) Navigator and ESG disclosure scores from Bloomberg. The authors regress market value and/or stock price on sustainability disclosures and ESG scores to evaluate information content. Findings ESG scores are positively associated with market value and price. Sustainability disclosures in the form of metrics and company-tailored narratives provide incremental information content on market value and/or price. Boilerplate disclosures reduce market value and price. Sustainability disclosures and ESG scores provide incremental information, suggesting that it would be beneficial to harmonize standards for reporting sustainability disclosures. Research limitations/implications The limitation is that the authors have only considered sustainability disclosures for a sample of US companies from two sources – SASB Navigator and Bloomberg. Practical implications The paper provides some evidence that may be pertinent to the debate on whether to harmonize the guidance on reporting sustainability issues. Social implications The paper provides evidence on the benefits to firms for reporting sustainability issues. Originality/value This paper is among the first to analyze company sustainability disclosures obtained from two different sources – SASB Navigator and ESG disclosure ratings – and compare them for relevance for company valuation. With SASB Navigator, the authors obtain further refinement into the nature of the information provided in the sustainability disclosures, that is, boilerplate, company-tailored or metrics disclosures.

R&D volatility and market value: the role of executive overconfidence

2019 ◽  
Vol 14 (2) ◽  
pp. 411-431
Author(s):  
Benlu Hai ◽  
Qingzhu Gao ◽  
Ximing Yin ◽  
Jin Chen
Keyword(s):  
Business Performance ◽  
Positive Impact ◽  
Market Value ◽  
Data Set ◽  
Content Type ◽  
Dynamic Perspective ◽  
Innovation Strategies ◽  
The Impact ◽  
The Relationship

Purpose Significant increase or decrease in research and development (R&D) expenditure may have an immense impact on market value. Based on the punctuated equilibrium theory, this paper aims to empirically analyze the impact of R&D volatilities on market value and the moderating effect of executive overconfidence. Design/methodology/approach The study uses the panel data set that covers 902 Shanghai and Shenzhen A-share manufacturing listed firms and multiple regression method to test the theoretical hypotheses. Findings The results show that both positive and negative R&D volatilities have a robust and significant positive impact on the market value. Further analysis shows that the executive overconfidence positively moderates the relationship between R&D volatilities and market value. Research limitations/implications In a rapidly changing and highly competitive environment, firms should recognize that the balance of innovation strategies will help to bring higher market value. Furthermore, firms could improve corporate governance to make the best of managerial characteristics, such as overconfidence, on the innovation decision-making process. Originality/value By pushing the static perspective to a dynamic perspective and empirically documenting the role of executive overconfidence, this study contributes to the literature on the relationship between R&D expenditure and market value, generating theoretical and practical insights for firms to improve innovation governance and innovation strategies to achieve better business performance.

Board gender diversity and US corporate bonds

2019 ◽  
Vol 15 (5) ◽  
pp. 771-791 ◽  
Author(s):  
Renee M. Oyotode-Adebile ◽  
Zubair Ali Raja
Keyword(s):  
Panel Data ◽  
Propensity Score ◽  
Design Methodology ◽  
Gender Diversity ◽  
Data Set ◽  
Content Type ◽  
Gender Diverse ◽  
Board Gender Diversity ◽  
The Impact ◽  
Women Participation

Purpose The purpose of this paper is to examine the impact of board gender diversity on bond terms and bondholders’ returns. Design/methodology/approach The authors perform pooled OLS regression, simultaneous regressions and propensity score matching to a panel data set of bond data for 319 US firms from 2007 to 2014. Findings The authors find that firms with gender-diverse boards have lower yields, higher ratings, larger issue size and shorter maturity. They also find that bondholders require fewer returns from firms with gender-diverse boards. However, the effect is more pronounced when women, constitutes at least 29.67 percent of the board. Originality/value This analysis supplements the findings that board gender diversity is essential for bondholders. It shows that bondholders should look at board gender diversity as a criterion to invest because bonds issued by firms with gender-diverse board have less risk. For practitioners, this study shows that more women participation on boards leads to a reduction in borrowing costs.

Auswirkungen von Mehrfachmandaten deutscher Vorstands- und Aufsichtsratsvorsitzender auf den Unternehmenserfolg / The Impact of Multiple Board Memberships of CEOs and Chairmen of Supervisory Boards on Corporate Performance in Germany

2010 ◽  
Vol 230 (5) ◽  
Author(s):  
Benjamin Balsmeier ◽  
Achim Buchwald ◽  
Heiko Peters
Keyword(s):  
Panel Data ◽  
Corporate Performance ◽  
Supervisory Board ◽  
Data Set ◽  
Supervisory Boards ◽  
External Management ◽  
The Impact ◽  
Public Criticism

SummaryMembers of management boards as well as supervisory boards often attract public criticism when they are simultaneously active in several other boards. We use a panel data set of the biggest German corporations for the period from 1996-2006 to estimate the impact of multiple board memberships of the CEO and the chairman of the supervisory board on corporate performance. The results suggest a positive and inverse U-shaped relation between the number of external supervisory board seats of the CEO and corporate performance. Chairmen of supervisory boards who simultaneously serve on external management boards tend to improve the performance of the controlled firm. Further external supervisory board seats of the chairman of a supervisory board do not seem to have any influence on corporate performance, though.

scholarly journals Family firms, banks and firm value: Evidence from Malaysia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chee Yoong Liew ◽  
S. Susela Devi
Keyword(s):  
Panel Data ◽  
Capital Market ◽  
Firm Value ◽  
Family Firms ◽  
Moderating Effect ◽  
Ownership Concentration ◽  
Content Type ◽  
Domestic Banks ◽  
High Level ◽  
Very High

PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms.Research limitations/implicationsThis research has focused only on family and non-family firms.Practical implicationsAn implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.Originality/valueThis research provides some insights to both academia and industry regarding the consequences of domestic banking relationship and different levels of concentrated ownership in family firms in an emerging market. These insights can help improve the corporate governance as well as ownership structure of Malaysian public-listed family firms which dominate the capital market. Our findings refute the argument by Peng and Jiang (2010) by demonstrating that corporate reputational effects may be a substitute for institutional deficiencies.

Do board interlocks support monitoring effectiveness?

2019 ◽  
Vol 42 (11) ◽  
pp. 1278-1296 ◽  
Author(s):  
Franziska Handschumacher ◽  
Maximilian Behrmann ◽  
Willi Ceschinski ◽  
Remmer Sassen
Keyword(s):  
Panel Data ◽  
Resource Dependence ◽  
Pay For Performance ◽  
Resource Dependence Theory ◽  
Risk Governance ◽  
Data Set ◽  
Content Type ◽  
Board Interlocks ◽  
Performance Sensitivity ◽  
The Impact

Purpose This paper aims to investigate the relationship between board interlocks and monitoring effectiveness for listed German companies in a context of risk governance. While agency-theory and resource-dependence-theory suggest a positive association between board interlocks and monitoring effectiveness, reasons such as limited temporal resources of busy board members may suggest a negative association. Design/methodology/approach By using panel data regression, the authors examined the association between board interlocks and monitoring effectiveness, which was approximated by excessive management compensation, pay-for-performance-sensitivity and CEO turnover-performance-sensitivity. The data set comprises 3,998 directorships for 132 listed German companies covering the period 2015-2017. Findings The authors find that board interlocks are associated with not only a more excessive management pay and less performance-sensitive turnover but also a higher pay-for-performance-sensitivity. Originality/value The study examines the impact of multiple directorships based on a German panel data set that includes both multiple appointments of members to national supervisory boards and all other appointments to national and international executive and supervisory bodies. The authors compile three measures to operationalize monitoring effectiveness.

Gesetzliche Mitbestimmung und Kapitalrendite Co-Determination and Return on Equity / Co-Determination and Return on Equity

2006 ◽  
Vol 226 (5) ◽  
Author(s):  
Kornelius Kraft ◽  
Marija Ugarkovič
Keyword(s):  
Panel Data ◽  
Capital Market ◽  
Negative Impact ◽  
Supervisory Board ◽  
Limited Liability ◽  
Voting Rights ◽  
Positive Influence ◽  
Return On Equity ◽  
German System ◽  
The Impact

SummaryMany observers regard the German system of codetermination as a very strong intervention into the working of the capital market. With the introduction of the codetermination law in 1976, employee representatives in limited liability companies with more than 2000 employees are entitled to occupy half of the number of seats and are granted nearly 50% of the voting rights on the supervisory board. We investigate the impact of the introduction of the German codetermination law in 1976 which implied an extension of co-determination from third parity to almost parity on return on equity. Our estimations are based on panel data for 179 companies from 1971 to 1976 and from 1981 to 1986, thus allowing for adjustment to the 1976 law. In contrast to frequently raised fears, no negative impact is found. Our empirical results suggest a positive influence from the 1976 strengthening of co-determination law on return on equity.

scholarly journals Does Corporate Governance Influence the Firm Value in Bangladesh? A Panel Data Analysis

2021 ◽  
Vol 24 (2) ◽  
pp. 84-100
Author(s):  
Mohammed Nazim Uddin ◽  
Mosharrof Hosen ◽  
Shahnur Azad Chowdhury ◽  
Mustafa Manir Chowdhury ◽  
Manjurul Alam Mazumder
Keyword(s):  
Corporate Governance ◽  
Data Analysis ◽  
Panel Data ◽  
Firm Value ◽  
Panel Data Analysis ◽  
Small Scale ◽  
Board Structure ◽  
Corporate Governance Code ◽  
Regulatory Bodies ◽  
The Impact

Corporate governance has been widely debated for over a decade with the collapse of the financial and capital market under the prejudicial roles of regulatory bodies. Therefore, the study examined the impact of corporate governance on firm value in Bangladesh. A total of 63 DSE-listed companies from 2005 to 2019 consisting of 8,505 observations on an average of 15 years were chosen. The subsequent tests for the given data were conducted to identify the appropriate panel data analysis method for adjusted diagnostic problems. In the specific panel data, the Panel Corrected Standard Error (PCSE) was utilised following the application of the random effects method to control econometric limitations. It was revealed that corporate governance lowered firm value when the board structure was familially and politically affiliated and led by CEO-duality. Moreover, the inclusion of dynamic professionals and independent members in the board structure increased the firm value. The use of the corporate governance code was proven to be highly challenging due to the participation of political and family leaders in corporate firms. Additionally, proper law enforcement was required to ensure transparency and accountability, thus reflecting firm value. As previous studies on corporate governance were conducted on a small scale and partial to the context of developing countries, this paper contributes a novel value in identifying and resolving the corporate governance crisis by reforming the board structure with diverse and professional directors. The regulatory bodies require improvement by including autonomous professional and independent members to exercise the corporate governance code.

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