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

Abstract

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.

Gender in Investment on Firm the Value of Firm

“…The results of this study support the research of [1] which states that there is a positive relationship between investment decisions and the value of the firm. The results of this study do not support [3] research which states that the asset return ratio does not have a significant effect on market value.…”

“…Research [2] shows that, the value of the company is significantly affected by investment decisions. But contrary to research conducted by [3] which shows that assets reinvestment ratio has no significant effect on market value. Based on the theory and gap of the above research, the hypothesis in this study is as follows: H1: There is an influence between investment decisions on the value of the firm.…”

“…Company financial decisions have a positive influence on firm value [2]. However, [3] shows that there is no significant relationship between total variable debt / total equity ratio and market value variable and assets reinvestment ratio has no significant effect on market value. Gender in companies have a positive influence on the value of firm because female directors have better performance [4].…”

Capital Structure, Profitability and Firm’s Value: Evidence from Jordan

“…Market value is defined as the market closing price-year end multiplied by the number of common shares outstanding (Cohen, et al, 2008). It is aimed to obtain more healthy results by decreasing the differences between values by logarithmic transformation; thus, Market value is measured by the natural logarithm of of mark value (Aras and Yildirim, 2018). The study also uses Tobin's Q as alternate firm value measure for robustness tests.…”

Working capital management, firm performance and nature of business

“…The performance of a business in terms of its profitability or market value is an outcome of various financial decisions taken by a firm (Aras and Yildirim, 2018). The importance of financial decisions makes the task of estimation of the financial requirements of a business, in the short as well as long term, very crucial.…”