scholarly journals How Are Foreign Firms Valued in U.S. Markets? Evidence from Firm and Country Characteristics

2019 ◽  
Vol 8 (4) ◽  
pp. 101
Author(s):  
Xiaoxiao Song
Keyword(s):  
Rule Of Law ◽  
Firm Value ◽  
Firm Growth ◽  
Market Value ◽  
Foreign Firms ◽  
Firm Level ◽  
Country Level ◽  
Cross Listing ◽  
Country Characteristics ◽  
Size Firm

This paper investigates the determinants of foreign firms’ value in U.S. markets by examining both firm and country characteristics. Prior studies have agreed on foreign firms’ value premium when they cross-list stocks in U.S. exchanges. However, little research has pursued evidence regarding how these foreign firms are valued after the cross-listing. I attempt to answer this question by comparing the determinants of firm value for both foreign cross-listing firms and U.S. domestic firms. The results from regression models show that, although foreign firms share similar firm-level determinants with U.S. firms (firm size, firm leverage, and firm growth), they are on average undervalued by U.S. investors. Furthermore, the home countries’ characteristics, such as the rule of law, play an important role in foreign firms’ market value. In fact, the undervaluation is only observed in foreign firms from the weak rule of law countries, but not from strong rule of law countries. Overall, foreign firms’ market value is determined by both firm-level and country-level characteristics after they cross-list in the U.S. markets.

scholarly journals Review of Corporate Governance Practices and Financial Distress Prediction

2018 ◽  
Vol 7 (4.28) ◽  
pp. 30
Author(s):  
Syed Muhammad Hassan Gillani Ahmad ◽  
Suresh Ramakrishnan ◽  
Hamad Raza ◽  
Humara Ahmad
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Firm Value ◽  
Agency Cost ◽  
Review Of Literature ◽  
Firm Level ◽  
Country Level ◽  
Financial Distress Prediction ◽  
Good Corporate Governance ◽  
Governance Practices

Good corporate governance practices play an import role in increasing the firm value. Based on the agency theory related to corporate governance, if an agent (management) does not protect interest of principal (shareholders) then, agency cost is occurred and this creates a bad impact on the corporate performance. Therefore, it is necessary to address weak corporate governance practices in early stages otherwise firms can go in financial distress and eventually become bankrupt. The objective of this current study is to conduct a nonsystematic review of literature on theories and models related to corporate governance and financial distress. In the light of thorough review of literature, it is found that corporate governance variables (i.e. ownership concentration, board size, board composition, CEO duality, level of independence of board from management and managerial ownership) are good predictors for predicting financial distress. Moreover, it is also found that these corporate governance variables were not only used separately for predicting financial distress but also used along with others variables (firm level and country level) for the purpose of enhancing quality of financial distress models.

scholarly journals Firm value in crisis: Effects of firm-level transparency and country-level institutions

2014 ◽  
Vol 46 ◽  
pp. 72-84 ◽  
Author(s):  
Ruben Enikolopov ◽  
Maria Petrova ◽  
Sergey Stepanov
Keyword(s):  
Firm Value ◽  
Firm Level ◽  
Country Level

scholarly journals Which aspects of CSR predict firm market value?

2018 ◽  
Vol 2 (1) ◽  
pp. 50-69 ◽  
Author(s):  
Stevan Bajic ◽  
Burcin Yurtoglu
Keyword(s):  
Firm Value ◽  
Fixed Effects ◽  
Market Value ◽  
Ordinary Least Squares ◽  
Specific Aspect ◽  
Social Dimension ◽  
Omitted Variables ◽  
Firm Level ◽  
Content Type ◽  
The Social

Purpose There is evidence that corporate social responsibility (CSR) practices predict higher firm value, but little evidence on which specific aspects of CSR drive this relationship. The purpose of this paper is to study this question in a sample drawn from 35 countries over 2003-2016. Design/methodology/approach The authors employ a research design that analyzes observational data with panel data methods including ordinary least squares, firm-random effects, and firm-fixed effects. Findings The authors find in a sample drawn from 35 countries over 2003-2016 an economically significant relationship between an overall CSR measure and firm value. The overall CSR score builds on data from Asset4 and is comprised of three indices for environmental, social, and corporate governance aspects of CSR. The authors find that the social index consistently predicts higher market value. The authors also show that the use of particular elements of CSR can lead to substantial omitted variables bias when predicting firm value. The results also suggest a similar bias in studies that focus on a single index, which captures a specific aspect of CSR, but omits the remaining aspects. Research limitations/implications The study is subject to limitations common to observational studies. Practical implications The authors find robust evidence that CSR predicts market value using a country-benchmarked overall CSR index. The power to predict firm value comes solely from the social dimension of this measure, which captures firm-level practices related to treatment of employees and stakeholder relations including those with customers and the broader community. Three elements drive the social index: customer/product responsibility, human rights, and employment quality. None of the remaining 12 elements significantly predicts firm vale in an empirical setting with firm-FE and extensive covariates. The authors also show that omitted aspects of CSR can easily lead to an omitted variable bias and that the magnitude of this bias is potentially greater with an OLS specification. Social implications Among the many dimensions of CSR, only a subset drives firm value. Policies that target to improve the CSR performance of firms adopt a broader definition of CSR. Originality/value The authors provide first-hand evidence on which specific aspects of CSR drive firm market value.

scholarly journals influence of capital structure, its size, growth of the value of the company with its profitability as variable intervening the company LQ45 are listed in Indonesia stock exchange

2021 ◽  
Vol 4 (4) ◽  
pp. 487-493
Author(s):  
Mgs. Abdul Hakim Fahmi ◽  
Mohamad Adam ◽  
Marlina Widiyanti ◽  
Isnurhadi Isnurhadi
Keyword(s):  
Adverse Effect ◽  
Capital Structure ◽  
Firm Size ◽  
Firm Value ◽  
Firm Growth ◽  
Stock Exchange ◽  
Significant Positive Effect ◽  
Size Growth ◽  
Size Firm ◽  
Positive Effect

This study aimed to determine the effect of capital structure, firm size, firm growth on firm value with profitability as an intervening variable in LQ45 companies listed on the Indonesia Stock Exchange in 2018-2020. The sample used is 33 LQ45 companies during the period 2018-2020. This research uses multiple linear regression and path analysis. The results showed that the capital structure had a significant adverse effect on profitability and firm value. Meanwhile, firm size and growth do not significantly affect profitability and firm value. Profitability has a significant positive effect on firm value. Indirectly, capital structure affects firm value through profitability, while firm size and growth do not indirectly affect firm value.

scholarly journals Wage Inequality and Firm Growth

2017 ◽  
Vol 107 (5) ◽  
pp. 379-383 ◽  
Author(s):  
Holger M. Mueller ◽  
Paige P. Ouimet ◽  
Elena Simintzi
Keyword(s):  
Wage Inequality ◽  
Firm Growth ◽  
Positive Association ◽  
Developed Countries ◽  
Evidence Based ◽  
Firm Level ◽  
Country Level ◽  
Global Trend ◽  
Pay Inequality ◽  
Over Time

We discuss firm-level evidence based on UK data showing that within-firm pay inequality--wage differentials between top- and bottom-level jobs--increases with firm size. Moreover, within-firm pay inequality rises as firms grow larger over time. Lastly, using wage data from 15 developed countries, we document a positive association between aggregate wage inequality at the country level and growth by the largest firms in the country. We conclude that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in the size of the largest firms in the economy.

The emergence of China, Inc.: behind and beyond the trade war

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shaomin Li ◽  
Matthew Farrell
Keyword(s):  
Party Leader ◽  
Foreign Firms ◽  
Chinese Firms ◽  
Firm Level ◽  
Content Type ◽  
Business Units ◽  
Country Level ◽  
Government Documents ◽  
Trade War ◽  
New Perspective

PurposeAnswering the call to study important issues in the real world (Buckley et al., 2017; Delios, 2017; Phan, 2019), and motivated by the trade war between the US and China, the authors look beyond it to examine the more fundamental issues behind it. From a political economy perspective, the authors examine the interplay of government, society and firms in China to identify new phenomena that may impact business with, and research on, China.Design/methodology/approachA multi-case qualitative method is used to present and analyze evidence and develop our arguments. Specifically, we use scholarly sources, anecdotal evidence, reports, statistics and government documents and policies to support our arguments.FindingsAfter four decades of economic reform, the Chinese Communist Party (CCP) controls every aspect of the society. Living, working and doing business are not a right but a privilege granted by the party. To a great degree, state-owned firms are business units/subsidiaries, and private/foreign firms are franchisees of the party, with the party leader being the CEO of China, Inc. The interplay between China and other countries is essentially a competition between a huge corporation and other states.Practical implicationsAt the firm level, our study suggests that for MNCs dealing with Chinese firms, they need to know that Chinese firms are units of China, Inc. Practitioners should take into account the long-term strategic goals of the CCP as well as business considerations when dealing with Chinese partners or competitors.Social implicationsAt the country level, our study shows that other countries dealing with China must be aware that they are dealing with a huge corporation.Originality/valueThat the CCP runs China as a corporation is a new perspective that will help the international community reexamine global competition.

scholarly journals Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting

2014 ◽  
Vol 90 (3) ◽  
pp. 1201-1240 ◽  
Author(s):  
Suraj Srinivasan ◽  
Aida Sijamic Wahid ◽  
Gwen Yu
Keyword(s):  
Rule Of Law ◽  
Internal Control ◽  
Home Country ◽  
Positive Association ◽  
Foreign Firms ◽  
Internal Control System ◽  
Country Characteristics ◽  
The Difference ◽  
Weak Rule

ABSTRACT We study the frequency of restatements by foreign firms listed on U.S. exchanges. We find that the restatement rate of U.S.-listed foreign firms is significantly lower than that of comparable U.S. firms and that the difference depends on the firm's home country characteristics. Foreign firms from countries with a weak rule of law are less likely to restate than are firms from strong rule of law countries. While the lower rate of restatements can represent an absence of errors, it can also indicate a lack of detection and disclosure of errors and irregularities. We infer the effect of detection and disclosure by associating the frequency of restatements with the quality of the firm's internal control system. We find that only U.S. firms and foreign firms from strong rule of law countries show a positive association between restatement frequency and internal control weaknesses. Firms from weak rule of law countries show no significant association. We interpret these findings as home country enforcement affecting firms' likelihood of detecting and reporting existing accounting misstatements. This suggests that for U.S.-listed foreign firms, less frequent restatements can be a signal of opportunistic reporting rather than a lack of accounting errors and irregularities.

scholarly journals The Influence of Intellectual Capital, Firm Size, and Firm Growth on Firm Value with Profitability as Moderating Variable on Companies That are Joined in the Jakarta Islamic Index And Listed on the Indonesia Stock Exchange 2016-2019 Period

2021 ◽  
Vol 8 (7) ◽  
pp. 296-303
Author(s):  
Aji Sugandi ◽  
Rina Br Bukit ◽  
Tarmizi .
Keyword(s):  
Firm Size ◽  
Intellectual Capital ◽  
Firm Value ◽  
Firm Growth ◽  
Stock Exchange ◽  
Secondary Data ◽  
Analysis Technique ◽  
Size Firm ◽  
Saturated Sample ◽  
The Relationship

The purpose of this study was to determine and examine the effect of intellectual capital, firm size, and firm growth on firm value in companies that are incorporated in the Jakarta Islamic Index and listed on the Indonesia Stock Exchange and test whether profitability can moderate the relationship between the independent variables and the dependent variable. This research is causal research using secondary data. The population of this study is companies that are members of the Jakarta Islamic Index listed on the Indonesia Stock Exchange from 2016 to 2019. The method of determining the sample uses a saturated sample so that a sample of 57 companies is obtained multiplied by four years of research to obtain 228 observations. The analysis technique used in this study uses panel data regression analysis and moderating test with Eviews 10 software tools. The results of this study partially intellectual capital has a negative and significant effect on firm value. Firm size has a negative and significant effect on firm value, and firm growth has a positive and significant effect on firm value. The profitability variable moderates the relationship between the influence of intellectual capital and firm size on firm value and does not moderate the relationship between the effect of firm growth on firm value. Keywords: Intellectual Capital, Firm size, Firm growth, Profitability, Firm Value.

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