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

Author

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  • Guler Aras
  • Filiz Mutlu Yildirim

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.

Suggested Citation

  • Guler Aras & Filiz Mutlu Yildirim, 2018. "The impact of corporate finance decisions on market value in emerging markets," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 67(9), pages 1959-1976, November.
    • Handle: RePEc:eme:ijppmp:ijppm-11-2017-0285
    DOI: 10.1108/IJPPM-11-2017-0285
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    Citations

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    Cited by:

    1. Sidra Tahir & Saira Baloch, 2023. "Role of Working Capital Management in Enhancing Firm Profitability: An Empirical Study on the Manufacturing Companies of Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 5(3), pages 231-237.
    2. Amanj Mohamed Ahmed & Nabard Abdallah Sharif & Muhammad Nawzad Ali & István Hágen, 2023. "Effect of Firm Size on the Association between Capital Structure and Profitability," Sustainability, MDPI, vol. 15(14), pages 1-17, July.
    3. Muhammad Azeem Naz & Rizwan Ali & Ramiz Ur Rehman & Collins G. Ntim, 2022. "Corporate governance, working capital management, and firm performance: Some new insights from agency theory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1448-1461, July.
    4. Michael Hadani, 2021. "The Reputational Costs of Corporate Litigation: Long-Term Media Reputation Damages to Firms’ Involvement in Litigation," Corporate Reputation Review, Palgrave Macmillan, vol. 24(4), pages 234-246, November.

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