• Journal of Korea Trade
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• v.25 no.7
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• pp.19-40
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• 2021

Purpose - This paper's purpose is to investigate how foreign ownership and innovation affect firm value. Design/methodology - Firm innovation is defined as operational efficiency, which is calculated by adopting data envelopment analysis (DEA). Additionally, R&D intensity is included as a measure of innovation in the analysis. We used firm-level data from manufacturing companies in Korea. The sample comprised 3,753 firm-year observations for every year in the period 2003-2017. Findings - We found that foreign ownership and innovation are positively related to firm value (Tobin's Q). Foreign ownership moderates innovation's contribution to firm value, implying that foreign ownership may enhance the value relevance of firm innovation. In addition, we found that firm innovation partially mediates the relationship between foreign ownership and firm value. Originality/value - This highlights the important role of foreign investors' monitoring; wherein foreign investors enhance firm value by facilitating firm innovation. Our results suggest that foreign ownership can be crucial for innovation and may serve to address weak ownership structures.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.11
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• pp.769-778
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• 2020

The purpose of this study was to examine the role of profitability as a mediating variable in influencing firm value. This study uses a sample of manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2018. The data used is panel data, with data analysis using multiple regression. Based on the Sobel test, profitability plays a role in mediating the effect of firm size on firm value. The effect of firm size on firm value is indirect, however, through profitability. Therefore, the market price of the shares of large-scale companies will increase if the resulting profitability is high. The capital structure and managerial ownership directly influence firm value. The results showed that managerial ownership and firm size had a positive effect on profitability, while capital structure had no effect on profitability. Capital structure and managerial ownership have a negative effect on firm value, while firm size and profitability have a positive effect on firm value. The main finding of this study is that profitability acts as an intervening variable in mediating the relationship between firm size and firm value.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.4
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• pp.863-873
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• 2021

The purpose of this research is to examine the effect of family share ownership on the value of family companies and differences in the value of the firm - a family firm managed by family members and a family firm managed by non-family members. This research is also related to agency problems, namely share ownership and professional management can increase company value. This research uses the firm value as the dependent variable that is measured using Tobin's Q. Meanwhile the independent variable in this research is family ownership, and firm size is the control variable. The purposive sampling method was used to determine the sample for this research. The object of this research is 78 family companies listing on the Indonesian Stock Exchange in 2017. The hypothesis is tested by using multiple linear regression analysis which meets the analysis requirements test or classic assumption test. The results show that majority family ownership does not affect the value of the firm and there is no difference in the firm value of family firm led by family members and the firm value of family firm managed by non-family members.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.383-390
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• 2021

This study investigates the effect of shareholders' rights, disclosure, and transparency on firm value. This study also investigates whether corporate social responsibility (CSR) is pure moderation or quasi moderation in the effect of shareholders' rights, disclosure, and transparency on firm value. This study's novelty is building a model framework to increase firm value and the role of CSR in increasing firm value. This study used secondary data provided by Indonesia, Malaysia, and Thailand Stock Exchanges. The sample of this study is 142 companies with four years of observations from 2012-2015. Firm value is measured by Tobin's Q. While shareholder's rights, disclosure, and transparency are measured using the ASEAN scorecard. The analysis method used in this study is a fixed effect model using a panel data approach. The result of this study shows that shareholders' rights have a significant positive effect on firm value. However, disclosure and transparency do not affect firm value significantly. In comparison, the CSR disclosure has a moderation effect on the relationship between shareholders' rights and firm value. The CSR disclosure does not have a moderation effect on the relationship between disclosure and transparency and firm value.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.3
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• pp.63-72
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• 2020

The study aims to investigate the impact level of earnings quality on firm value. The study has used data with 3,910 observations at listed firms on Vietnam Stock Exchange for the period from 2010 to 2018, and GLS regression analysis is employed in this research. Earnings quality is measured in the aspects of earnings management, earnings persistence, and timeliness of profitability. This study also considers a number of controlled variables that positively influence the firm's value such as firm size, fixed asset investment rate and dividend payout ratio. The results show that earnings quality is positively associated with firm value with having statistical significance. In contrast, some determinants negatively influence firm value such as financial leverage, ratio of market value to book value, and revenue growth. Determinants of firm size, the rate of investment in fixed assets, the rate of dividend payment positively affect the firm value. In contrast, determinants of financial leverage, revenue growth rate and market value to book value ratio are inversely related to firm value according to economic value, Tobin's Q or Price. Based on the findings, some recommendations are proposed for investors, management and policy makers as well in the context of emerging countries including Vietnam.

• KDI Journal of Economic Policy
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• v.42 no.3
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• pp.33-52
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• 2020

Patents are widely used in the literature as a measure of firm-level innovation. It is regarded that patents improve a firm's operational environment and ultimately increase the value of the firm. However, the relationship between patents and firm value in Korea is under-explored in the literature due to the difficulty of constructing datasets. This paper examines whether patents in Korea increase the market value of a firm. To do this, I exploit novel data on firm-level patents and financial information of all listed Korean companies during the period of 1993-2015 and estimate the non-linear production-function type of Tobin's q equations on R&D, patents, and citations. Surprisingly, I find that patents and citations are weakly associated with firm value, while R&D is strongly associated with an increase in firm value. These results direct imply that policymakers in Korea should enhance patenting incentives to encourage firms to innovate.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.12
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• pp.323-336
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• 2021

The present study aims to examine the impact of real earnings management on the future value of the firm and its persistence. The study also tests suspect firm effects on the relationship between real earnings management and the future value of the firm. The sample of the present study consists of all listed non-financial firms from the year 2011 to 2018. Real earnings management has been measured in three alternative ways viz., abnormal operating cash flows, abnormal discretionary spending, and abnormal production cost. Tobin's Q is used as a measure of firm value. The interaction term of real earnings management and Tobin's Q is used to test firm value persistence. The results of the analysis disclose that out of three measures of real earnings management, abnormal reduction in discretionary spending only has a significant negative impact on the persistence of firm value. Moreover, the suspect firm analysis reveals that when the underlying motive of real earnings management is to meet zero earnings, both abnormal increases in operating cash flows and abnormal reduction in discretionary spending have a significant negative impact on firm value persistence.

• Asia-Pacific Journal of Business
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• v.12 no.3
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• pp.71-85
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• 2021

Purpose - Prior studies have found that the characteristics of managers, corporate governance structure, corporate social responsibility and so on affect firm value. This study explores whether managerial overconfidence affects firm value through empirical analysis. Design/methodology/approach - Korean-listed non-financial companies from 2011 - 2017 are collected as the research sample. Firm value is measured by Tobin's Q, and managerial overconfidence is measured using a composite index encompassing various financial data. OLS and fixed effect model are used to investigate the relationship between managerial overconfidence and firm value. Findings - Managerial overconfidence is positively associated with firm value. Additional analysis reveals the following: (1) In the three subsamples of large, backbone, and small- and medium-sized enterprises, managerial overconfidence is beneficial to firm values. (2) Managerial overconfidence increases firm value on the t+1 year. Research implications or Originality - We use a comprehensive index with higher trust and feasibility to measure manager overconfidence and empirically confirm that managerial overconfidence can become a factor to improve firm value. Thus, it is necessary for shareholders to adopt an objective and neutral attitude and reasonably understand the psychological characteristics of managers when selecting CEOs. In addition, it is necessary to continue to optimize the measurement method of managerial overconfidence.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.813-821
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• 2021

The relationship between capital structure policy and firm value is interesting to study because the concept of capital structure was initiated by Modigliani and Miller who claimed that the company's capital structure is not a factor in its value. They asserted that linking leverage with firm value was irrelevant. Therefore, this study examined the role of growth opportunities as a moderating variable for the relationship between capital structure and firm value. The population of this study is 300 companies from the manufacturing sector that are listed on the Indonesia Stock Exchange (IDX) for the period 2015-2018. To analyze the data, the subgroup moderation method was employed by dividing the data into two parts: companies with high growth opportunities and companies with low growth opportunities. The results revealed that capital structure had a direct positive effect on firm value. Furthermore, the test results of the two regression models of growth opportunities as the moderating variable are very interesting. It was found that for companies with high growth opportunities, the use of debt had a negative effect on firm value, and conversely, the use of debt had a positive effect on firm value for companies with low growth opportunities. The statistical F-test results proved that growth opportunities are a moderating variable for the relationship between capital structure and firm value.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.12
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• pp.223-231
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• 2020

This research aims to examine (1) the effect of carbon emission disclosure on firm value, (2) the effect of good corporate governance on firm value, (3) the mediating role of financial performance between carbon emission disclosure and firm value, and (4) the mediating role of financial performance between good corporate governance and firm value. The research sample includes 43 mining, agro, and manufacturing firms listed in the Indonesian Stock Exchange over the 2015-2017 period. Carbon emission disclosure is measured by an indicator of the Global Reporting Initiative Series of Environmental Aspect. Good corporate governance is measured by the corporate governance score of shareholder rights, boards of directors, outside directors, audit committee and internal auditor, and disclosure to investors. Financial performance is measured by return on assets, while firm value is measured by Tobin's Q. Data analysis uses the structural equation modeling. The result shows carbon emission disclosure and good corporate governance have no direct effect on firm value. On the other hand, financial performance mediates the effect of carbon emission disclosure and good corporate governance on firm value. It shows that higher carbon emission disclosure and good corporate governance are meaningless for the investor if they do not give any financial performance improvement.