• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.1241-1248
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• 2021

This study employs data from CRSP/Compustat files for the period from 2003 to 2017 and applies a panel data analysis. The results of this study show a positive relationship between trade credit and the firm's market value, however, the results show a negative relationship if we test the impact of financial credit on the firm's market value. The results have direct policy implications for investors, the firm's management, and financial strategy. An implication of our study is that using trade credit as a source of financing may give a positive signal of the firm's creditworthiness and increase the firm's market value. Also, the results of our study indicate that the benefits of using trade credit may outperform the cost of using it as a source of finance. Prior studies examine the impact of financial leverage on the firm's value, however, this study contributes to the existing studies that examine the factors that affect the firm's market value by examining the impact of using trade credit finance on the firm's market value. The main limitation of this study is that the results are based on listed firms, using data from unlisted firms is not available.

• The Journal of Asian Finance, Economics and Business
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• v.10 no.2
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• pp.163-174
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• 2023

This study aims to investigate the effect of the composition of the board and ownership structure on a firm's value in Jordanian firms. Specifically, it aims to determine the effect of board size, (CEO) duality, and family, foreign, institutional, and government ownership on a firm's value. An ordinary least square regression (OLS) was employed to examine the study hypotheses in a sample of 35 Jordanian industrial firms (175 firm-year observation) for a period of five years from 2016-2020. As measured by Tobin's Q (Q ratio) and market-to-book (MB ratio) for Jordanian industrial firms listed on Amman Stock Exchange (ASE). The result found that foreign ownership, institutional ownership, and family ownership have a significant and positive effect on firm value. By contrast, government ownership does not have a significant effect on firm value. With respect to board composition (CEO duality and board size), the study results found no evidence to support the effect of board composition on firm value. The study recommended the concerned authorities with several recommendations, most notably: taking the necessary measures to ensure the continuity and growth of family businesses because of their positive impact on the value of the company and economic growth, spreading awareness about how governance protects the interests of investors.

• Asia Marketing Journal
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• v.15 no.3
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• pp.53-77
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• 2013

As advertising and promotions are categorized as operating expenses, managers tend to reduce marketing budget to improve their short term profitability. Gauging the value and accountability of marketing spending is therefore considered as a major research priority in marketing. To respond this call, recent studies have documented that financial market reacts positively to a firm's marketing activity or marketing related outcomes such as brand equity and customer satisfaction. However, prior studies focus on the relation of marketing variable and financial market variables. This study suggests a channel about how marketing activity increases firm valuation. Specifically, we propose that a firm's marketing activity increases the level of the firm's product market information and thereby the dispersion in financial analysts' earnings forecasts decreases. With less uncertainty about the firm's future prospect, the firm's managers and shareholders have less information asymmetry, which reduces the firm's cost of capital and thereby increases the valuation of the firm. To our knowledge, this is the first paper to examine how informational benefits can mediate the effect of marketing activity on firm value. To test whether marketing activity contributes to increase in firm value by mitigating information asymmetry, this study employs a longitudinal data which contains 12,824 firm-year observations with 2,337 distinct firms from 1981 to 2006. Firm value is measured by Tobin's Q and one-year-ahead buy-and-hold abnormal return (BHAR). Following prior literature, dispersion in analysts' earnings forecasts is used as a proxy for the information gap between management and shareholders. For model specification, to identify mediating effect, the three-step regression approach is adopted. All models are estimated using Markov chain Monte Carlo (MCMC) methods to test the statistical significance of the mediating effect. The analysis shows that marketing intensity has a significant negative relationship with dispersion in analysts' earnings forecasts. After including the mediator variable about analyst dispersion, the effect of marketing intensity on firm value drops from 1.199 (p < .01) to 1.130 (p < .01) in Tobin's Q model and the same effect drops from .192 (p < .01) to .188 (p < .01) in BHAR model. The results suggest that analysts' forecast dispersion partially accounts for the positive effect of marketing on firm valuation. Additionally, the same analysis was conducted with an alternative dependent variable (forecast accuracy) and a marketing metric (advertising intensity). The analysis supports the robustness of the main results. In sum, the results provide empirical evidence that marketing activity can increase shareholder value by mitigating problem of information asymmetry in the capital market. The findings have important implications for managers. First, managers should be cognizant of the role of marketing activity in providing information to the financial market as well as to the consumer market. Thus, managers should take into account investors' reaction when they design marketing communication messages for reducing the cost of capital. Second, this study shows a channel on how marketing creates shareholder value and highlights the accountability of marketing. In addition to the direct impact of marketing on firm value, an indirect channel by reducing information asymmetry should be considered. Potentially, marketing managers can justify their spending from the perspective of increasing long-term shareholder value.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.2
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• pp.953-962
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• 2021

This study aims to examine the effect of environmental performance and good corporate governance (GCG) on the firm values mediated by corporate social responsibility (CSR). The sample in this study was obtained using a purposive sampling method and collected from 205 companies. The analytical method used is moderating regression analysis. The results of this study indicate, first, that corporate social responsibility affects the value of the company. The results of this study indicate that the better corporate governance will increase the value of the firm and vice versa. Second, corporate social responsibility has a direct effect on the firm value, but the effect is still smaller when compared with the internal mechanisms of good corporate governance. This study also found that corporate social responsibility cannot mediate the effect of good corporate governance on firm value. Third, the company's environmental performance influences the company's value. Finally, the effect of environmental performance on company value will be better if mediated by corporate social responsibility. This result shows that environmental performance is a proof that the company's environmental and social concern, which is manifested in corporate social responsibility, will be responded positively by the market so that it will increase share prices (firm value).

• Asia-Pacific Journal of Business
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• v.12 no.1
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• pp.57-69
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• 2021

Purpose - The purpose of this study is to investigate the effect of macroeconomic conditions on the relationship between CSR and firm value. Design/methodology/approach - Employing KEJI index as a proxy for a firm's CSR activities, we investigate whether investors discount the value of CSR activity during the economic recession when a firm's bankruptcy risk is high and thus its future sustainability is suspected. Findings - Our empirical result represents that the value of a firm with high CSR score is undervalued during recession, reflecting investors doubt the sustainability of a firm whose CSR score is high when overall economy is exposed to high downside risk. Research implications or Originality - It implies that investors may not regard the CSR activities as an indicator of corporate sustainability. Also, the result represents that stable macroeconomic condition can be one of the important factors to make the CSR activity increase a firm's value.

• Journal of Distribution Science
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• v.17 no.1
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• pp.89-94
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• 2019

Purpose - In recent digital information society, the most important factor of to increase the firm value of the distribution company is not the activity to increase the sales through the general advertisement of the unspecified majority by purchasing the finished product, but to grasp the needs of the consumers and to develop a new distribution platform that connects producers and consumers directly through consumer-tailored advertisements centering on e-commerce. Therefore each company in the distribution industry is spending a lot on research and development investment to innovate the distribution technology and distribution system, and the research and development investment expenditures can affect firm value. The purpose of this study is to analyze the impact of research and development investment expenditures in the distribution industry on market value of the firm. Research design, data, and methodology - As a research method, the sample firms are those which are listed on korea stock exchange market from 2011 to 2017 and the research model is Ohlson(1995) model, which is a representative valuation model using accounting information. This study analyzes the effect of distribution company's research and development investment expenditures and advertising expenditures on market value of the firm Results - The results of empirical analysis show that research and development investment expenditures for developing new distribution technology and advertising expenditures for promoting sales in the distribution company are all positively related to the market value of firm. Therefore, in describing market value of the distribution company, it is shown that the research and development investment expenditures and advertising expenditures together with the net asset and net profit are the important accounting information that explains the market value of firm. This result show that investment expenditures on research and development for the innovation of distribution technology of distribution company creates intangible intellectual assets and increases market value of the firm. Conclusions - The result of this study shows that research and development investment expenditures for the new distribution technology as well as the spending for the advertisement in the future is a very important investment expenditures that can increase the market value of the distribution company.

• The Journal of Economics, Marketing and Management
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• v.4 no.3
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• pp.1-6
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• 2016

The purpose of the present study is to investigate the relationship between Managerial overconfidence and vehicle and parts manufacturing firm value of the listed companies on the Tehran Stock Exchange (TSE). The population includes 25 firms selected through systematic sampling. The data is collected from the audited financial statements of the firms provided by TSE's website from 2010 to 2015. In this study the variables, Overconfidence based on earning per share (OEPS), Overconfidence based on capital cost (OCC) has been used to investigate Managerial overconfidence. The results of multiple linear regression analysis show that there is a significant relationship between Overconfidence based on earning per share (OEPS) and firm value. In addition, there is a significant relationship between Overconfidence based on capital cost (OCC) The present research examined the relationship between Managerial overconfidence and vehicle and parts manufacturing firm value of the listed in Tehran Stock Exchange. The results of multivariate regression accepted two the hypotheses of the research. There is a significant relationship between Managerial overconfidence and vehicle and parts manufacturing firm value.

• Asia-Pacific Journal of Business
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• v.10 no.4
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• pp.205-221
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• 2019

The purpose of this research is to investigate the effect of cash holdings on firm value in export companies. To investigate this effect, we analyzed 5,386 samples drawn from export companies listed in the KOSDAQ from 2011 to 2018. During this period, the International Financial reporting Standards have been employed. The research results are as follows. First, the results of a T-test showed that the level of the firm value of export companies with high levels of cash holdings is significantly higher than that of those with low levels of cash holdings. In addition, the level of the firm value of export companies with higher levels of cash holdings than in the previous year is higher than the level might otherwise be. Furthermore, the effects of cash holdings on firm value are similar to those on return on asset. These results suggested that export companies have little used a way of increasing their debt levels in order to increase cash holdings. Second, the results of a multivariate regression analysis presented that the cash holdings of export companies in listed the KOSDAQ significantly influence their firm value. Moreover, a higher level of cash holdings than in the previous year significantly affect firm value. These results proposed that making higher cash holdings than in the previous year might be useful in enhancing firm value. We found that export companies efforts to increase cash holdings positively influence changes in firm value. We also found that Korean export companies maintain their financial stability by obtaining sufficient liquidity specifically in a high uncertainty era like the recent time. We finally firmed an effort to maintain cash holdings as a reasonable choice for export companies.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.5
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• pp.749-759
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• 2021

We investigate the relationship between ownership control disparity and future firm value in high-technology industries, and whether the effect of ownership control disparity on future firm value is differentiated when high-tech industry firms belong to chaebol groups. Using 11,848 firm-year observations of Korean firms listed on the stock market from 2006 to 2019, we employ univariate analysis and Heckman 2 stage analysis to test our hypotheses. We define high-technology industries as ICT industries based on the Korean Standard Industrial Classification. We measure future firm value using average Tobin's q for the next three years and ownership control disparity using the shareholding ratio of affiliated companies. Our univariate test results show that mean of Tobin's q is higher in ICT firms than non-ICT firms and firms largely owned by affiliates. In multivariate test, we find that the ICT firms with higher ownership control disparity are positively associated with future firm value. However, this association is lessened when firms belong to a chaebol group. Based on our findings, we suggest ownership control disparity has an additional positive effect on future firm in high-technology industries. The negative impact of chaebol groups on the association suggests the possibility of diversification discount in business group.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.49-59
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• 2021

This study empirically analyzes the effect of firm overinvestment propensity on the value relevance of capital investment. In order to verify this point, this study attempts to analyze the value relevance of overinvestment firms' capital investments. The analysis was performed according to the model of Biddle et al. (2009) and McNichols and Stubben (2008) on overinvestment propensity for analysis, and the results are as follows. First, in terms of overinvestment, corporate capital investment shows negative value relevance, so the excessive investments above reasonable levels have reduced firm's value. In contrast, the value relevance for capital investment showed a positive value for firms whose managerial propensity changed, that is, from under-investment in the previous year, it shifted to overinvestment in the current year. Second, as a result of analyzing the value relevance of the investment increase according to the investment propensity, the overinvestment firms showed negative values and the underinvested firms showed positive values; thus, the value relevance of the increase in investment was opposite to the investment propensity of the firm. These findings confirm that the stock market differentially evaluates investment efficiency according to investment propensity, continuity, and investment alterations, and reflects it appropriately in the firm's value.