Determinants of firm value in Latin America: an analysis of firm attributes and institutional factors

Saona, Paolo; Martín, Pablo San

doi:10.1007/s11846-016-0213-0

Cited by 30 publications

(14 citation statements)

References 94 publications

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“…This may be used as robust evidence that managers take more advantage of market myopia when institutional settings are endowed with weaker governance systems and where greater gaps of information exist between insiders and outsiders. In other words, although we subscribe to previous literature on the fact that governance systems are relatively weak in the Latin American region [40], we also recognize that there are still some intraregional differences in transparency and governance, as supported by our findings. Thus, in more transparent financial systems and where the right of shareholders is relatively better protected, the impact on market performance caused by opportunistic manipulation of financial reports is not as large as in contexts of less transparency and governance.…”

Section: Discussion Of Results By Levels Of Governancesupporting

confidence: 82%

Earnings Quality and Market Performance in LATAM Corporations: A Combined Agency and Cognitive Approach to Investors’ Perceptions of Managerial Information

Saona¹,

Slocum²,

Muro³

et al. 2017

Corporate Governance and Strategic Decision Making

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This chapter studies the impact of financial reporting quality on firms' market performance in a sample of LATAM corporations. We infer that, especially in contexts of high information asymmetry, investors are not able to effectively discern the quality of the information they are provided with and can therefore be misled in their investment decisions by managerial opportunism. Our theoretical framework is built upon a combined agency theory and cognitive approach. We thereby seek to provide a valuable method to better understand how investors could be making suboptimal choices as a consequence of managers' opportunistic behaviour. Empirically, we use the Generalized Method of Moments (GMM) model, hypothesizing that a positive relationship should be observed between the opportunistic manipulation of earnings (that is, the misuse of accounting accruals) and the firm's market performance (that is, the consequential behaviour of investors). Through this 'pioneering' methodology, applied to the relatively under-researched LATAM region, we find that: (1) Financial data are identifiably and consistently manipulated through discretionary accruals in these countries. (2) As manipulation increases, markets do tend to appear more attractive to investors. (3) The elasticity of the market reaction to this manipulation is higher in what we term 'opaque' countries.

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Section: Discussion Of Results By Levels Of Governancesupporting

confidence: 82%

Earnings Quality and Market Performance in LATAM Corporations: A Combined Agency and Cognitive Approach to Investors’ Perceptions of Managerial Information

Saona¹,

Slocum²,

Muro³

et al. 2017

Corporate Governance and Strategic Decision Making

Self Cite

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“…(2017) examined the impact of investment and financing decisions on market value in Turkey. A recent study which is conducted by Saona and San Martín (2018) investigated determinants of firm value in Latin America. They utilized public firms from Argentina, Brazil, Chile, Colombia, Mexico and Peru for the 1997–2013 period.…”

Section: Literature Reviewmentioning

confidence: 99%

The impact of corporate finance decisions on market value in emerging markets

Aras

Yıldırım

2018

IJPPM

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Purpose The purpose of this paper is to analyze the conformity of the impact of corporate finance decisions on market value with the basic theoretical approaches in the two emerging economies, which show great similarities in terms of the economic structures, and to examine the results obtained by determining how these decisions affect market value comparatively. Design/methodology/approach In this study, the effect of corporate finance decisions on market value is tested empirically with panel data analysis method by using data of 274 real sector firms traded in BIST and 249 firms in BOVESPA industry index, between 2010 and 2014. Findings The analysis results show that the increase in the borrowing level of firms operating in both countries reduces the market value; the increase in the level of profitability in the firms has a positive effect on the market value. In addition, it is possible to say that the effect is different in terms of investment decisions for Turkish and Brazilian firms. Research limitations/implications The limitations of the study are that the non-financial sectors between 2010 and 2014 in Turkey and Brazil including the company data, and the companies with missing years are removed from the data set. The findings show that more effective and balanced management of the variables by the financial manager affects these rates and have an impact on increasing the market value. Originality/value In this study, a fundamental subject in finance is addressed by analytical methodology and comparative tests for countries are conducted.

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“…Good governance is a mechanism for companies to produce long-term and sustainable economic value for stakeholders and shareholders to achieve good corporate governance (Worokinasih and Zaini, 2020). Institutional and managerial ownership are some of the good governance mechanisms that affect the market value (Lee and Lee, 2019; Peter and Ayoib, 2016; Piosik and Genge, 2020; Saona and Martín, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Social Activities and Market Value

2022

QAS

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Social activities are an interesting topic because they involve the company's relationship with stakeholders. This study aims to determine the effect of good governance mechanisms and financial performance on market value with social activities as a moderating variable. The research sample consisted of 108 firm-year observations of companies in the hotel, restaurant and tourism sectors listed on the IDX for the period 2014-2019. Social activities moderate the relationship between financial and market performance and protect market value from deteriorating performance. This finding provides a new perspective on the role of social activities that management should pay attention to. In a situation of declining financial performance, social activities can weaken the negative impact.

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Determinants of firm value in Latin America: an analysis of firm attributes and institutional factors

Cited by 30 publications

References 94 publications

Earnings Quality and Market Performance in LATAM Corporations: A Combined Agency and Cognitive Approach to Investors’ Perceptions of Managerial Information

Earnings Quality and Market Performance in LATAM Corporations: A Combined Agency and Cognitive Approach to Investors’ Perceptions of Managerial Information

The impact of corporate finance decisions on market value in emerging markets

Social Activities and Market Value

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