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Dynamics of Firm Value, Financial Performance, Leverage, and Governance: A Panel Data Analysis of Listed Indian Firms

Author

Listed:
  • Shalini Talwar

    (Associate Professor, K. J. Somaiya Institute of Management, Somaiya Vidyavihar University, Mumbai, India)

Abstract

This research examined the effect of accounting-based performance measures, capital structure and corporate governance on firm value, measured by Tobin's Q, of listed Indian firms in fast-moving consumer goods (FMCG), automobiles (auto) and information technology (IT) sectors for a period from 2004 through 2017. The study used panel least squares dummy variables (LSDV) method to show that sales growth, return on equity, debt-equity ratio and corporate governance were statistically significant predictors of firm value for the sectors under the study. The fixed effects model was found to be more robust than pooled regression model by the Wald test, confirming that the dynamics between the dependent and the explanatory variables were different for each of the sectors. As the impact of variables on firm value was different for the manufacturing and services sectors, a key implication of the study is that managers should take into consideration the sectoral effect while estimating firm value.

Suggested Citation

  • Shalini Talwar, 2020. "Dynamics of Firm Value, Financial Performance, Leverage, and Governance: A Panel Data Analysis of Listed Indian Firms," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(2), pages 201-219, September.
    • Handle: RePEc:ijb:journl:v:19:y:2020:i:2:p:201-219
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    corporate governance; debt-equity ratio; dividend payout ratio; firm value; income growth; least squares dummy variables (LSDV) method; return on assets; sales growth;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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