Business strategy, stock price informativeness, and analyst coverage efficiency

Zhang, Rongrong

doi:10.1002/rfe.1101

Cited by 4 publications

(3 citation statements)

References 53 publications

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“…Prior studies have advocated the use of two-stage least squares (2SLS)/Instrument Variable (IV) test for alleviating endogeneity concerns that arise from reverse causation (for example, firms with higher Z score have better capital employed efficiency) (Magerakis and Habib, 2021; Jiraporn et al , 2014; Zhang, 2021). In the first stage, the instrumented variable of business strategy (STRATEGYinstrumented) is calculated using the median business strategy (STRATEGYmedian) of the firms in the same industry classified based on two-digit SIC code.…”

Section: Resultsmentioning

confidence: 99%

Business strategy, intellectual capital, firm performance, and bankruptcy risk: evidence from Oman's non-financial sector companies

Dalwai

Salehi

2021

ARA

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PurposeThis research examines the influence of business strategy and intellectual capital on firm performance and bankruptcy risk of Oman's non-financial sector companies.Design/methodology/approachThe data comprises 380 firm-year observations collected from 2015 to 2019 for the non-financial sector companies listed on the Muscat Securities Market. This study measures business strategy using the Miles and Snow typologies and Porter's strategies as alternative measures. The study uses the Granger-causality test to measure the bi-directional causality between independent and dependent variables. The authors use alternative measurements of business strategy and 2SLS/IV estimation to validate the OLS results.FindingsAccording to the Miles and Snow typologies, most of Oman's non-financial firms were analyzers. The empirical results show a negative relationship between business strategy and return on equity (ROE), suggesting defender-type strategy leads to an increase in firm performance. The OLS results show no influence of A-VAIC on firm performance and Altman-Z score. The structural capital efficiency is positively associated with ROA, and Altman Z score consistent with the hypothesized relationship. The Granger causality test shows no inference of causality between any independent and dependent variables except for Z score and CEE.Research limitations/implicationsThe business strategy results from the firm performance and bankruptcy risk models are valuable to the researchers from an emerging market and non-financial companies' perspective. Oman's diversification strategy of its economic activities through non-financial sector companies receives an impetus through the findings of this study. As this study is limited to Oman's non-financial sector companies, future research on business strategy impact can be extended to the financial sector, other GCC, and emerging countries.Originality/valueThe findings of this study contribute to the sparse literature on business strategy in an emerging market like Oman. This study enriches the knowledge of business strategy typologies proposed by Miles and Snow, and Porter. It also contributes to the extant literature on firm performance and bankruptcy risk.

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Section: Resultsmentioning

confidence: 99%

Business strategy, intellectual capital, firm performance, and bankruptcy risk: evidence from Oman's non-financial sector companies

Dalwai

Salehi

2021

ARA

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“…Specifically, prospectors have less readable disclosures than defenders due to higher exposure to operating complexity and environmental uncertainty. Similarly, Zhang [40] finds that prospectors have less stock price informativeness than defenders. Bentley-Goode et al [41] find that prospectors are more likely to have weaker internal controls than defenders.…”

Section: Business Strategymentioning

confidence: 98%

Business strategy and blockchain adoption

Xing¹,

Pinsker²,

Huangfu³

2022

Proceedings of the Annual Hawaii International Conference on System Sciences

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Although blockchain has drawn significant attention since its introduction in 2008, determinants of its adoption remain largely unknown. Relying on the Resource-Based View (hereafter, RBV) of the firm as a theoretical guide, we investigate whether a firm's business strategy affects its decision on blockchain adoption. We split firms into prospectors (risk takers) and defenders (interested in cost stability) consistent with the business strategy framework to determine if the former group is more likely to adopt blockchain.Using a sample of 208 firms from 2015 to 2019, we find that prospectors are more likely to adopt blockchain than defenders. Results suggest blockchain brings more net benefits to prospectors than to defenders. The results support RBV and business strategy theories and are robust to the consistency test, factor analysis, and placebo test. The findings imply that the alignment between business strategy and technology characteristics motivates firms to adopt specific technology.

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“…However, the role of business strategy in determining price informativeness has remained unexplored. Zhang (2021) argues that innovation-oriented PROSPECTOR firms have low stock price informativeness (i.e., high synchronicity) due to their bad news hoarding (Habib & Hasan, 2017) and financial reporting irregularities (Bentley et al, 2013), which allows less firm-specific information transmission to the market. Consequently, there is more market and industry specific information incorporated into stock prices of PROSPECTOR firms than DEFENDER firms resulting in higher synchronicity for PROSPECTOR firms than DEFENDER firms.…”

Section: Business Strategy and The Stock Price Informativenessmentioning

confidence: 99%

Business strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature

Habib

Ranasinghe

Perera

2023

Accounting & Finance

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We review the empirical archival literature on the consequences of business strategy and strategic deviation on accounting, finance, and corporate governance outcomes. We use Miles and Snow's (Organizational strategy, structure, and process. McGraw‐Hill, 1978; Organizational strategy, structure and process. Stanford University Press, 2003) strategy typology that has been quantified using financial statement data by Bentley et al. (Contemporary Accounting Research, 2013, 30, 780). Research has used this strategy score to investigate the consequences of firms following two distinct strategies namely, prospectors versus defenders, on various organisational outcomes. Our survey provides mixed evidence on the relationship between business strategy, financial reporting quality, finance outcomes, and corporate governance including corporate social responsibility (CSR) activities. We offer some suggestions for future research.

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Business strategy, stock price informativeness, and analyst coverage efficiency

Cited by 4 publications

References 53 publications

Business strategy, intellectual capital, firm performance, and bankruptcy risk: evidence from Oman's non-financial sector companies

Business strategy, intellectual capital, firm performance, and bankruptcy risk: evidence from Oman's non-financial sector companies

Business strategy and blockchain adoption

Business strategy and strategic deviation in accounting, finance, and corporate governance: A review of the empirical literature

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