Examining internal capability determinants on firms' financial performance before and after going public: a case of listed firms in Thailand

PurposeThis study aims to empirically analyze the effect of firm financial strengths (liquidity, leverage, and cost of goods sold) and firm characteristics (utilization, tangibility and company size) towards firm financial performance and study the differences of these effects before and after firms going public.Design/methodology/approachThe analysis is based on 159 firms listed on the Stock Exchange of Thailand (SET) during the transition periods of interest from one year before each firm became a listed firm and up to five years after becoming a listed firm (data collection from 2002 to 2019). Fuzzy set qualitative comparative analysis (fsQCA) is applied for the analysis.FindingsThe empirical evidence shows that the firms have to maintain different levels of determinants during different years of operation. Before becoming listed firms, the firms' size plays a significant role in determining the firms' financial performance. Different characteristics are required, according to the size of the firms. One year after becoming listed firms, a low level of production and operating expenses in relation to sales and low leverage are the two important factors for superior financial performance. Then, 2–5 years after becoming listed firms and after a steady state is reached, two more factors, good liquidity and high tangibility, are shown to be significant for good financial performance of the firms.Originality/valueUnlike prior studies, this study explains the causal relationships or combinations of determinants of financial strengths and firm characteristics, before and after going public toward good financial performance of firms, which cannot be identified by analyzing the calendar-year performance.

What Can Explain Momentum? Evidence from Decomposition

This study comprehensively evaluates and ranks a large number of competing explanations for the momentum anomaly. As a benchmark for evaluation, firm fundamentals are found to be the most promising among well-known explanations of momentum, followed by prospect theory and mental accounting, and anchoring effect. Collectively, all explanations capture 31% of momentum, whereas 69% of momentum remains unexplained. This study thoroughly examines what fractions of the momentum anomaly emerge from the interaction effects between past returns and various firm characteristics. It is further found that strategies based on firm characteristics and residual momentum can significantly alleviate the severity of momentum crashes. Finally, robustness analysis is provided for choosing different formation and holding periods, excluding January observations, and analyze at the level of portfolio rather than individual stock. This paper was accepted by David Simchi-Levi, finance.

Internationalization of Large Companies from Central and Eastern Europe or the Birth of New Stars

With rapid globalization, firm internationalization has become an important corporate strategy as well as the necessity for the survival and growth of the business. In the last decade, there has been a growth in literature that studies this field, especially in emerging countries. However, there exists a gap in the literature in CEE countries. This study aims to fill that gap by conducting an analysis and providing insight regarding the factors that lead to an increase in firm internationalization in this region. This research paper studies the main determinants that have an impact on the firm internationalization of large companies in CEE countries using panel data empirical methods, such as the random effect model and generalized method of moments (GMM) model for a panel of 50 firms from 11 CEE countries and a time duration of 14 years. This study determines the main factors that positively influence firm internationalization in selected countries. These countries have experienced a radical transition from centrally planned economies to market economies, and although they have experienced economic growth and a rise in productivity, they are still facing several challenges. Therefore, it is important to know what facilitates and helps firms to expand in international markets. The main findings derived from this study show that firm characteristics, such as age, size and corporate performance, have a positive effect on the internationalization process. An increase in age, size and firm performance leads to higher levels of internationalization. Larger and relatively older firms have access to more resources and are more experienced in dealing with the environmental difficulties characteristic of these countries.

Firm Characteristic and Fair Value Adoption in the Measurement of Biological Assets

Research on how fair value adoption plays an essential role in changing accounting systems in companies. Therefore, this study was conducted to find out the firm characteristics affecting the application of fair value in companies in Vietnam. Statistical analysis technique through a logit model based on 186 companies shows that two business sizes and types of companies impact fair value adoption. In which large-scale companies tend to apply fair value higher than small enterprises. State-owned companies tend to apply fair value higher than joint stock companies operating in the community's interests.

Audit Committees and COVID-19-Related Disclosure Tone: Evidence from Oman

In this study, we content analyzed chairman’s statements to measure the tone of COVID-19-related disclosure in Omani listed firms for the year ending 2020. We also examined whether audit committee (AC) characteristics influence disclosure tone. After controlling for corporate board and firm characteristics, our regression analysis showed that two AC characteristics (gender diversity and overlapped directors) positively affect good news information and negatively affect bad news information. It also showed that AC size positively affects bad news information. No evidence was found that the AC independence, meeting frequency, multi-directorships, and financial expertise have an impact on the tone of COVID-19-related disclosures. Our paper contributes to the growing literature by being the first study to examine whether AC characteristics influenced disclosure tone during the COVID-19 pandemic. Our results indicate that investors and regulatory bodies should take AC characteristics into account in determining the tone of COVID-19-related disclosures.

The Effects of Internal Audit, Audit Committee and Firm Characteristics on Audit Fees in a Multi-Country and Industry Setting

This paper examines the association between audit fees and attributes of internal audit (IA), audit committee (AC), as measured by independence and financial expertise, as well as characteristics of the firm. The determinants of audit fees have been extensively investigated in the prior literature, but the results are conflicting. We develop a comprehensive model from a multi-country and multi-industry perspective. A total of 3,136 companies covering a period of 10 years (2011-2020) with 15,247 observations from 55 countries were included in this study. We found that the most critical variables that have a significant positive effect on the audit fees are client size, leverage (risk), profitability, complexity, losses, AC independence, AC expertise and auditor size. The study also shows that audit pricing is significantly negatively related to foreign operations, auditor tenure, and internal audit independence. The results highlight variables that affect audit fees across a range of countries/industries.