Journal of the Korea Convergence Society (한국융합학회논문지)

Korea Convergence Society (한국융합학회)
권호 표지
DOI QR코드

DOI QR Code

Effect of Strategic Deviation on Corporate Value, Future Performance and Performance Persistence

전략적 일탈이 기업가치, 미래 성과, 성과지속성에 미치는 영향

  • Park, Won (School of Business Administration, Kyungnam University)
  • 박원 (경남대학교 경영학부)
  • Received : 2022.02.27
  • Accepted : 2022.04.20
  • Published : 2022.04.28
Download PDF
⟨ Previous Next ⟩

Abstract

This study examines the effect of deviant strategies on corporate value and future performance by departing from the same strategy as other firms in the same industry. Business strategy affects the development and growth potential of a firm and becomes an important factor in determining future performance and corporate value. Business strategies differ according to industrial characteristics, and a firm that implements a heterogeneous strategy within the same industry may have different future performance or corporate value compared to other firms. This study analyzed listed firms from 2011 to 2019 in order to verify the effect of strategic deviation on the relationship between future performance or corporate value. The analysis results are as follows. First, strategic deviation was found to have a positive (+) effect on corporate value, but it was found to have a negative (-) effect on future performance and also affect the persistence of performance. These results are meaningful in examining the effect of strategic deviation on corporate value or future performance and performance persistence by classifying strategies in prior studies and expanding the results that the type of strategy affects corporate value and future performance.

본 연구는 산업 내에서 모방적인 경영전략을 표방하지 않고 차별화된 전략을 수행하는 기업의 미래 성과 혹은 기업가치의 관련성을 검증하고자 한다. 경영전략은 기업의 발전과 성장 가능성에 중요한 역할을 하며 미래 성과와 기업가치를 결정짓는 요인이기도 하다. 이러한 경영전략은 산업에 따라 차이가 존재하며 동일 업종에서 이질적인 전략은 기업의 미래 성과와 가치에 영향을 줄 수 있다. 본 연구에서는 국내 기업을 대상으로 전략적 일탈 기업들의 미래 성과와 기업가치의 관계를 검증하기 위하여 2011년부터 2019년까지 상장법인을 대상으로 분석을 실시하였다. 검증결과 전략적 일탈은 기업가치에 양(+)의 영향을 미치는 것으로 나타났지만 미래 성과는 음(-)의 영향을 미치며 성과의 지속성에도 영향을 미치는 것으로 나타났다. 이러한 결과들은 전략을 구분하여 전략에 따른 특성이 기업가치, 미래성과 등에 대한 연구를 확대하여 전략적 일탈이 기업가치 혹은 미래성과, 성과의 지속성에 미치는 영향을 검증한 것에 의미가 있는 것으로 보인다.

Keywords

References

  1. C. D. Ittner & D. F. Larcker. (1997). Quality Strategy, Strategic Control Systems, and Organizational Permance. Accounting Organizations and Society, 22(3-4), 293-314. DOI : 10.1016/S0361-3682(96)00035-9
  2. M. Chae, D. Kang & H. Lee. (2002). A Study on the Determinants of New Venture's Performance Focusing on Competitive Strategy. Korean Management Review, 31(5), 1289-1309.
  3. E. Kim, S. Han & H. Choi. (2006). Pre-Entry Resource, Deployment of Competitive Strategy, and Performance in a New Business Entry. Korean Management Review, 35(5), 1531-1564.
  4. H. Yi, S. Lee & S. Hong. (2010). Firm's Strategy and Future Profitability. Korean Accoounting Journal, 19(5), 67-88.
  5. S. Ji, J. Lee & S. Shin. (2013). A Study on the Relation between Competitive Strategy and Firm Perfomance for Industral Competition. Korean Accounting Review, 38(1), 1-41.
  6. D. Miller, I. L. Breton-Miller & R. H. Lester. (2013). Family Firm Governance, Strategic Conformity, and Performance: Institutional vs. Strategic Perspectives. Organization Science, 24(3), 189-209. DOI : 10.1287/orsc.1110.0728
  7. D. L. Deephouse. (1999). To Be Different, or to Be the Same? It's Question (and Theory) of Strategicc Balance. Strategic Management Journal, 20(2), 147-166. DOI : 10.1002/(SICI)1097-0266(199902)20:2<147::AID-SMJ11>3.0.CO;2-Q
  8. M. A. Carpenter. (2000). The Price of Change: The Role of CEO Compensation in Strategic Variation and Deviation from Industry Strategy Norms. Journal of Management, 26(6), 1179-1198. DOI : 10.1177/014920630002600606
  9. J. Tang, M. Crossan & W. G. Rowe. (2011). Dominant CEO, Deviant Strategy, and Extreme Performance: The Moderating Role of a Powerful Board. Journal of Management Studies, 48(1), 1479-1503. DOI : 10.1111/j.1467-6486.2010.00985.x
  10. X. Dong, K. C. Chan, Y. Cui & J. X. Guan. (2021). Strategic Deviance and Cash Holdings. Journal of Business Finance and Accounting, 48(3-4), 742-782. DOI : 10.1111/jbfa.12487
  11. J. Lee, J. Hwang & G. Nam. (2021). Strategic Deviance and Asymmetry Cost Behavior. Korean Management Review, 50(4), 1037-1069. DOI : 1.10.17287/kmr.2021.50.4.1037
  12. S. Kim & S. Choi. (2021). The Effect of Strategic Deviance on the Cost of Debt. Korean Management Review, 50(2), 557-582. DOI : 10.17287/kmr.2021.50.2.557
  13. S. Kim & J. Han. (2019). Strategic Deviance and Audit Quality. Korean Accounting Review, 28(6), 221-250. DOI : 10.24056/KAJ.2019.11.001
  14. R. Wang. (2018). Strategic Deviance and Accounting Conservatism. American Journal of Industrial and Business Management, 8(5), 1197-1228. DOI : 10.4236/ajibm.2018.85082
  15. J. A. Ohlson.(1995). Earnings, Book Values, and Dividends in Equity Valuation. Contemporary Accounting Research, 11(2), 661-687. DOI : 10.1111/j.1911-3846.1995.tb00461.x
  16. C. K. Prahalad & G. Hamel. (1994). Strategy as a Field of Study: Why Search for a New Paradigm?. Strategic Management Journal, 15(2), 5-16. DOI : 10.1002/smj.4250151002
  17. M. F. Wiersema & K. A. Bantel. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35(1), 91-121. DOI : 10.5465/256474
  18. N. Houqe & R. Monem. (2013, May). Corruption, Political Institutions, and Accounting Environment: A Cross-Country Study. International Journal of Accounting Symposium, (pp.1-40). Wuhan : ELSEVIER.
  19. A. Chatterjee & D. C. Habrick. (2007). It's All about Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance. Administrative Science Quarterly, 52(3), 351-386. DOI : 10.2189/asqu.52.3.351
  20. J. Won & S. Rhu. (2016). The Effect of Firm Life-Cycle and Competitive Strategy on Performance Persistence. Korean Accounting Journal, 25(5), 33-65.
  21. R. E. Miles & C. C. Snow. (1978). Organizational Strategy, Structure and Process. New York : McGraw-Hill.
  22. R. E. Miles & C. C. Snow. (1978). Organizational Strategy, Structure and Process. California : Standford University Press.
  23. V. Govindarajan & A. K. Gupta. (1985). Linking Control Systems to Business unit Strategy: Impact on Performance. In Readings in Accounting for Management Control. Boston : Springer.
  24. E. F. Montemayor. (1996). Congruence between Pay Policy and Competitive Strategy in High-Performing Firms. Journal of management, 22(6), 889-908. DOI : 10.1016/S0149-2063(96)90041-0
  25. N. Rajagopalan. (1997). Strategic Orientations, Incentive Plan Adoptions, and Firm Performance: Evidence from Electric Utility Firms. Strategic Management Journal, 18(10), 761-785. DOI : 10.1002/(SICI)1097-0266(199711)18:10<761::AID-SMJ906>3.0.CO;2-2
  26. Y. Kim & J. Hong. (2017). The Effect of Suitability between Business Strategy and Executive Compensation on Corporate Performance. Korean Accounting Journal, 26(6), 45-72. DOI : 10.24056/KAJ.2017.10.006
  27. G. Choi, K. Kim & H. Ryu. (2015). Business Strategy and Tax Avoidance. Korean Accounting Review, 40(5), 271-326.
  28. R. Simons, (1987), Accounting Control Systems and Business Strategy: An Empirical Analysis. Accounting, organizations and society, 12(4), 357-374. DOI : 10.1016/0361-3682(87)90024-9
  29. K. A. Bentley, T. C. Omer & N. Y. Sharp. (2013). Business Strategy, Financial Reporting Irregularities, and Audit Effort. Contemporary Accounting Research, 30(20), 780-817. DOI : 10.1111/j.1911-3846.2012.01174.x
  30. G. Choi & H. Ryu. (2017). Business Strategy and Earnings Management. Korean Accounting Review, 42(1), 1-62. DOI : 10.24056/KAR.2016.11.001
  31. G. Choi, S. Kim & H. Ryu. (2017). Accounting Transparency, Business Strategy and Accounting Conservatism. Korean Accounting Review, 42(6), 31-79. DOI : 10.24056/KAR.2017.10.001
  32. M. Kim & Y. Jun. (2015). The Effect of Growth Opportunities on the Relationship Between Retained Earnings and Firm Value. Korean Business Review, 44(3), 737-765.
  33. S. Ryu. (2003). Firm's Growth, the Value of Net Assets, and Valuation Characteristics. Accounting Information Research, 21, 285-308.
  34. J. McConnell & J. Muscarella. (1985). Corportate Capital Expenditure Decisions and the Market Value of the Firm. Journal of Financial Economics, 14(3), 399-422. DOI : 10.1016/0304-405X(85)90006-6
  35. J. Francis, D. Nanda & P. Olsson. (2008). Voluntary Disclosure, Earnings Quality, and Cost of Capital. Journal of Accounting Research, 46(1), 53-99. DOI : 10.1111/j.1475-679X.2008.00267.x
  36. A. N. Nwaobia, J. D. Kwarbai, O. O. Jayeoba & A. T. Ajibade. (2016). Finacial Reporting Quality on Investos' Decisions. International Journal of Economics and Financial Research, 2(7), 140-147. http://arpgweb.com/
  37. L. Fauvera & A. Naranjo. (2010). Derivative Usage and Firm Value: The Influence of Agency Costs and Monitoring Problems. Journal of Corporate Finance, 16(5), 719-735. DOI : 10.1016/j.jcorpfin.2010.09.001
  38. S. Lee, J. Kim & A. Park. (2005). Agency Problems and Firm Value: Evidence from Korea. Korean Journal of Management Accounting Research, 5(1), 33-55.
  39. K. Lee, E. Ki & S. Yoon. (2017). Tax Avoidance and Firm Value. Journal of Taxation and Accounting, 18(3), 121-143. DOI : 10.35850/KJTA.18.3.05
  40. C. A. Marquardt & C. I. Wiedman. (2004). The Effect of Earnings Management on the Value Relevance of Accounting Information. Journal of Business Finance & Accounting, 31(3-4), 297-332. DOI : 10.1111/j.0306-686X.2004.00541.x
  41. G. C. Biddle, G. Hilary & R. S. Verdic. (2009). How Does Financial Reporting Quality Relate to Investment Efficiency?. Journal of Accounting and Economics, 48(2-3), 112-131. DOI : 10.1016/j.jacceco.2009.09.001
  42. B. Lee & W. Paek. (2015). Investment Efficiency, Earnings Persistence, and Value Relevance. Korean Business Review, 44(5), 1277-1304. DOI : 10.17287/kmr.2015.44.5.1277
  43. Y. Kim & J. Hong. (2018). The Effect of Business Strategy on Corporate Social Resposibility Activities and Corporate Performance. Korean Accounting Research, 27(3), 127-161. DOI : 10.24056/KAJ.2018.05.006
  44. S. Lee. (2018). Earings Persistence, Earnings Smoothing and the Cost of Equity Capital. Korea International Accounting Review, 79, 107-125. DOI : 10.21073/kiar.2018..79.005
  45. F. Li. (2008). Annual Report Readability, Current Earnings, and Earnings Persistence. Journal of Accounting and Economics, 45(2-3), 221-247. DOI : 10.1016/j.jacceco.2008.02.003
  46. R. Frankel & L. Litov. (2009). Earnings Persistence. Journal of Accounting and Economics, 47(1-2), 182-190. DOI : 10.1016/j.jacceco.2008.11.008
  47. R. Oei, A. Ramsay & P. Mather. (2008). Earnings Persistence, Accruals ad Manageral Share Ownership. Accounting & Finance, 48(3), 475-502. DOI : 10.1111/j.1467-629X.2007.00248.xCitations:28
  48. K. Lee. (2019). The Matching Principle, Earnings Persistence and Information Asymmetry. The Journal of the Korea Contents Association, 19(5), 280-286. DOI : 10.5392/JKCA.2019.19.05.280
  49. D. Kim & J. Kim. (2021). The Effect of Over-investment on Stock Price Informativeness about Future Earnings and the Role of the Auditor on Relationship. Korean Accounting Review, 46(3), 89-128. DOI : 10.24056/KAR.2021.01.004
  50. K. K. Yee. (2010), Earnings Quality and the Equity Risk Premium: A Bechmark Mode. Contemporary Accounting Research, 23(3), 833-877. DOI : 10.1506/8M44-W1DG-PLG4-8E0M
  51. Y. Jang. (1994). Determinants of Earnings-price Ratios: A Reexamination. Review of Financial Economics, 3(2), 105-120. DOI : 10.1002/j.1873-5924.1994.tb00575.x
  52. W. Park & Y. Kim. (2016). Association between Overinvestment Propensity and Firm Performance or Valuation: Role as Firm Life Cycle, Korea International Accounting Review, 70, 71-91. DOI : 10.21073/kiar.2016..70.004
  53. S. Jang. (2009). The Effect of Firm-Specific Factors on the Value Relevance of Earnings and Its Components, Korean Business Education Review, 53, 173-194.
  54. Y. Kim & W. Park. (2019). The Impact of Corporate Life Cycle and Business Strategy on Future Performance. Korea International Accounting Review, 83, 189-212. DOI : 10.21073/kiar.2019..83.008
  55. C. A. Jane, H. Jon & C. M. Jane. (1998). The Effect of CEO Disclosure Beliefs on the Volume of Disclosure About Corporate Earnings and Strategy. Behavioral Research in Accounting, 10, 240-269.
  56. W. Park & H. Shin. (2020). The Impact of Firm's Differentiation Strategy and Cost Advantage Strategy on Future Performance Levels. Korean Business Education Review, 35(4), 447-470. DOI : 10.23839/kabe.2020.35.4.447
  57. A. Schneible & A. Trypathy. (2016). Firm Strategy and Market Reation to Earnings. Advances in Acocunting, 33(June), 20-34. DOI : 10.1016/j.adiac.2016.04.006
  58. G. Kwon. (2006). Empirical Analysis on the Value Relevance of Accounting Earnings and Book Value According to the Firm Size and Debt Ratio. Journal of Taxation and Accounting, 7(2), 141-164.
  59. S. Ryu. (2003). Firm's Growth, the Value of Net Assets, and Valuation Characteristics. Accounting Information Research, 21(4), 285-308.
  60. Y. Han. (2019). The Impact of Cash Holdings Level on Firm Value. Journal of Taxation and Accounting, 20(4), 93-115. DOI : 10.35349/tar.2019..62.005
  61. D. Song. (2005). A Study on the Usefulness of Beta in the Determination of Firm Valuation -Focused on KOSDAQ Listed Companies. Journal of Taxation and Accounting, 6(1), 57-69.
  62. H. Shin. (2012). The Influence of the Optimal Fund Raising by Debt in Korean Companies. The Journal of Business Education, 26(4), 109-127.