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Does Financial and Economic Factors Influence Firm Value of Listed Company in Tehran Stock Exchange (TSE)?

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  • Ehsan Rajabi
  • Iran Ebrahimi

Abstract

This paper would clearly reflect the need for the development of the individual indicators which allow the proper presentation of the analytical activity of the enterprises operating in the industrial sector of the economy. Therefore, we investigate and rank factors of economic, financial and accounting affecting the firm value of listed companies in Tehran Stock Exchange by using on Analytic Hierarchy Process (AHP) method. The data sample was selected five companies among ten active industries sector of the economy in the Tehran Stock Exchange from 2009 to 2015. The purpose of this research is to identify and rank economic and accounting factors affecting the value of firms with the use of multi-criteria decision-making techniques. In the first stage, the pooled OLS estimator was used to estimate the conceptual model and find significant factors include inflation, interest rate, liquidity growth rate, customer price index (CPI), profit sustainability, firm size, profitability, financial leverage affects firm value. In the second stage, the Analytic Hierarchy Process (AHP) was applied to rank the most effective factors on firm value.The empirical results show all listed variables had a significant impact on firm value in the stock market except the interest rates. By using the AHP method, inflation and liquidity growth as macroeconomic variables, and profit sustainability and growth opportunities as financial variables, were most affective factors influence on the Firm value orderly.

Suggested Citation

  • Ehsan Rajabi & Iran Ebrahimi, 2020. "Does Financial and Economic Factors Influence Firm Value of Listed Company in Tehran Stock Exchange (TSE)?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 174-187.
    • Handle: RePEc:bas:econst:y:2020:i:1:p:174-187
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    File URL: https://www.iki.bas.bg/Journals/EconomicStudies/2020/2020-1/8_Ehsan-Rajabi_f-f.pdf
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    References listed on IDEAS

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    1. Graham, Roger C. & King, Raymond D., 2000. "Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand," The International Journal of Accounting, Elsevier, vol. 35(4), pages 445-470, 010.
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    Cited by:

    1. Mahdi Moradi & Andrea Appolloni & Grzegorz Zimon & Hossein Tarighi & Maede Kamali, 2021. "Macroeconomic Factors and Stock Price Crash Risk: Do Managers Withhold Bad News in the Crisis-Ridden Iran Market?," Sustainability, MDPI, vol. 13(7), pages 1-16, March.
    2. Vlora Prenaj & Iliriana Miftari & Besnik Krasniqi, 2023. "Determinants of the Capital Structure of Non-Listed Companies in Kosovo," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 36-50.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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