Contemporary drivers of business growth: Evidence from US public companies

Abstract

Achieving profitable business growth and maximizing shareholder value with limited resources are the crucial issues of doing business today. The goal of this paper is to identify endogenous factors that increase business growth by analyzing companies' annual reports. This paper contains the results of assessment on the influence tangible assets and intellectual capital (IC) have on Price-to-Earnings Ratio (P/E Ratio) as a proxy for business growth. The research methodology of this paper is based on regression analysis with panel data. Empirical results are tested on annual reports data of the 40 US companies from TOP 150 of Brand Finance Global 500 list for 2008-2020. The results reveal that the role of tangible assets in ensuring business growth is declining in contradistinction to IC, which has gained a stronger effect on business growth. Moreover, findings suggest that balanced management of tangible assets and IC could ensure a more effective internal expansion of business. Additionally, results indicate that the influence of human capital and fixed assets on business growth is declining in competitive environment. This paper integrates and complements prior studies and concepts on business growth, financial performance, IC and tangible assets management, aiming to develop an integrated framework for improving the efficiency of managing business growth drivers. Practical application of the obtained results lies in helping the companies' management to choose the right combination of endogenous factors that will ensure business growth.