Does High Growth Create Value for Shareholders? Evidence from S&amp;P500 Firms

Ataünal, Levent; Gurbuz, Ali Osman; Aybars, Aslı

doi:10.18267/j.efaj.160

Cited by 10 publications

(7 citation statements)

References 22 publications

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“…This finding is consistent with the existing literature on this phenomenon, and therefore the study does not reject the null hypothesis that firm growth does not affect the shareholders ' wealth of the listed manufacturing companies in Nigeria. These results are consistent with the study of Ataunal, Gurbuz and Aybars (2016) which found that firm growth had a positive impact on the market value of the share.…”

Section: Regression Resultssupporting

confidence: 92%

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Board gender: shrinkage or upsurge in wealth of shareholders

Salawudeen¹,

Isa²

2021

Pressacademia

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Purpose-Shareholder wealth problems are becoming such a commonly recognized standard of corporate activity as a result of globalization and deregulation, which was intended to interact to improve economic growth and shareholder wealth. However, truth reveals that globalization and liberalization combined to deprive companies of massive profits since modern executives are more concerned with compensation, profits, control, and reputation than protecting shareholders' faith and trust. Thus, this study examines the impact of board gender on shareholders' wealth of listed manufacturing companies in Nigeria. Methodology-This study descriptive research design, the population consists of sixty-three listed manufacturing companies and a filter was used to pick the sample size of fifty-one, annual data collected from the Nigerian Stock Exchange (NSE) over twelve years from 2008 to 2019. And Pooled OLS regression analysis was adapted as the estimation technique. Findings-The result showed that female directors significantly upsurge the wealth of shareholders. Board gender has a positive influence on wealth optimizers MVS, Tobin's q and PRF. Also, Leverage, Firm Growth and Firm Age upsurge shareholders' wealth while firm size have no significant effect on the wealth of the shareholders. Conclusion-This paper concludes that female board directors can generate healthier financial decision and translates into positive effect on the wealth of shareholders. Therefore, Nigeria's manufacturing companies need to strengthen their efforts to increase the number of women on the board, as a number of these companies do not have a single female director on their board.

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Section: Regression Resultssupporting

confidence: 92%

“…It is believed that high growth (GWT) creates wealth for shareholders. Firm growth (increase in sales revenue) proliferates the resources of shareholders (Ataunal, Gurbuz & Aybars 2016). For our sample of 51 listed manufacturing firms, we use firm growth as a control variable for robust shareholder wealth.…”

Section: Variable Measurementmentioning

confidence: 99%

Board gender: shrinkage or upsurge in wealth of shareholders

Salawudeen¹,

Isa²

2021

Pressacademia

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“…A mere maximizing growth perhaps may assist the firm to accomplish its short-term goals, but not the long-run objective what they seek to-the 'value-creation' (Ramezani et al 2001). The value-creation maximizes around the sustainable growth rate of an organization and decreases sharply, once actual growth exceeds the sustainable growth rate (Ataünal et al 2016). In conjunction, managers are very concerned about establishing and maintaining a positive overall reputation (Schulz and Flickinger 2018).…”

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confidence: 99%

Impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth: evidence from India

Mukherjee

Sen

2022

Financ Innov

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This article investigates the impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth in India. Using static panel data methodology for a sample of NSE listed leading 138 non-financial companies over the time-frame 2011 to 2018, we find that CEO remuneration and tenure maintains significant positive associations with corporate reputation, while duality and CEO busyness are found to be associated with corporate reputation negatively. The results also show that female CEOs and CEO remuneration are associated with corporate financial performance positively, whereas CEO busyness, as expected, holds a significant negative relationship with corporate financial performance. Moreover, the results demonstrate that CEO age is associated with corporate sustainable growth negatively, while tenure appears to have a significant and positive association with corporate sustainable growth. The results are robust to various tests and suggest that in the Indian context, demographic and job-specific attributes of CEOs exert significant influence on corporate reputation, financial performance, and corporate sustainable growth. The empirical findings would provide a basis for the shareholders and companies to identify areas of consideration when appointing CEOs and determining their roles and responsibilities.

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“…The Higgins (1977Higgins ( , 1981 basis was applied in many studies. Jarvis et al (1992) used to asses macro equivalent of product portfolio analysis; Vasiliou and Karkazis (2002) applied it on data from the National Bank of Greece, and found that its actual growth exceeded the SGR, and consequently discuss four possible financial strategies to deal with it; Hyytine and Pajarinen (2005) used the SDR to study the relation between firm-level disclosure quality and the availability of external finance to firms in Finland and found that excess growth is associated with the quality of disclosure; Phillips et al (2010) applied the SDG model to investigate the crosssectional variations of financial ratios among privatively held retail companies measured as different growth cycle stages; Jin and Wu (2008) analyzed the contribution of intellectual capital to the firm's sustainable growth ability in the case of the listed companies in China; Pickett (2008) applied SGR model to identify the subtle relationship between marketing and operation efficiencies; Listiani and Supramono (2020) investigated the effect of fixed asset growth on sustainable growth rate and the role of sustainable growth rate in mediating the impact of fixed asset growth rate on firm value; Mubeen et al (2021) examined the SDR model in the case of the non-financial forms from seven emerging markets; Mukherjee and Sen (2019) studied the impact of corporate governance on corporate sustainable growth; Farouq et al (2022) made a SDG on ROA analysis applied in the case of the Saudi Banks; Shao (2018) analyzed the sustainable growth characteristics of China's listed companies in textile and garment industry in the 2008-2011 period, using Wilcoxon signed-rank test in the post-crisis era; Ataunal et al (2016) investigated the relationship between growth rate and shareholder value creation, using a sample of 243 non-financial Standard and Poor's 500 (S&P500) companies and found that sales growth below sustainable growth rate (SGR) enhances shareholder value at a significantly higher rate compared to growth above sustainable growth rate; Akhtar et al ( 2021) investigated the impact of financial leverage on the firm's performance, i.e., sustainable growth (SGR), Tobins Q, return on assets (ROA), return on equity (ROE), and return on sales (ROS) and found inverted U-shaped relationship between financial leverage and performance; Wahyuni and Dino (2016) studied the determinant factors of the sustainable growth rate in the case of manufacturing companies listed on the Indonesia Stock Exchange; Wijaya and Atahau (2021) in their study aimed to determine the effect of profitability on sustainable growth in Malaysian and Indonesian manufacturing firms; Rahim (2017) also investigated the association between firm performance and sustainable growth rate in the case of...…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Policy and Companies’ Sustainable Growth

Naumoski

2022

Economic Themes

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This paper investigates the intercompany-specific characteristics as a determinant of the sustainable growth rate. We researched a sample of companies listed on the Macedonian stock exchanges. We found that the average actual growth rate for the 2010-2019 period is only 0.38%, while the sustainable growth rate was 1.42%. This is because of the poor operating performance of the companies, moderate leverage, and average retention ratio of 82.5% for the whole sample. The actual growth rate in specific years is drastically higher than the sustainable growth rate, while in certain years it is negative. The sustainable growth rate is positively affected by the profit margin, retention ratio, asset turnover, financial leverage, and ROE, and it is negatively affected by the operating cash flow, company size, growth opportunities, and non-debt tax shield.

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Does High Growth Create Value for Shareholders? Evidence from S&P500 Firms

Cited by 10 publications

References 22 publications

Board gender: shrinkage or upsurge in wealth of shareholders

Board gender: shrinkage or upsurge in wealth of shareholders

Impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth: evidence from India

Financial Policy and Companies’ Sustainable Growth

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