Does the decision to issue public debt affect firm valuation? Russian evidence

Davydov, Denis; Nikkinen, Jussi; Vähämaa, Sami

doi:10.1016/j.ememar.2014.06.004

Cited by 14 publications

(12 citation statements)

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“…Many previous research also found that higher debt to equity ratio tend to have negatively related to its stocks return (Ramezani et al 2002;Gombola, Marciukaityte 2007;D'Mello, Gruskin 2014;Davydov et al 2014). Research results show that rational investor tends to give negative sentiment on firms which have higher debt to equity ratio.…”

Section: Inmentioning

confidence: 72%

Research of the Stock Price Overreaction and Investor Overconfidence Issues

Raharja

Suhaeli

Mranani

2017

Business, Management and Education

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This research examines the existing of investor overconfidence in the capital market and the phenomena of stock prices reversal in the future due to the existing of this behavior. It has a different approach to test the existing of investor overconfidence by introducing firm’s growth as the information which has triggered many investors to behave overconfidently. By using multiple regression analysis, the results of this research confirmed our conducted hypothesis, investor tends to behave overconfident to firms which have higher growth. It proofed by the positive relation between firms’ growth and trading volume. Afterward, this research also found that higher growth firms tend to have declining on its performance in the future. The negative relation between firms’ growth and longterm performance means that the stock’s price reversal caused by the existing of investor overconfidence.

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Section: Inmentioning

confidence: 72%

Research of the Stock Price Overreaction and Investor Overconfidence Issues

Raharja

Suhaeli

Mranani

2017

Business, Management and Education

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“…The study involved some control variables to examine the characteristics of the firms related to overvaluation. These are based on previous empirical studies showing that SIZE is positively related to q-ratio (Ameer, 2012), and Tobin's q as a proxy of firm market value (Davydov et al, 2014). Furthermore, ROA and operating cash flow (OCF) are positively related to the price to earnings ratio of high-value equity as the reflection of overvaluation (Houmes et al, 2013) as shown in Table 2.…”

Section: Control Variablementioning

confidence: 93%

Does Value Creation Drives Growth Illusion? An Evidence from Indonesia Stock Exchange

Wibowo¹,

Ghozali²

2018

ERSJ

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The main aim of this study is to explore the illusion effect on the growth market of firm value, and to examine the value creation of manufacturing companies listed in the Indonesia Stock Exchange (IDX). The study used pooled data of the manufacturing companies listed in the Indonesia Stock Exchange (IDX), and estimated the overvaluation using the model developed by Rhodes-Kropf, Robinson, and Viswanathan (2005). The real earnings management, based on overproduction and auditing, results on an increase in the valuation. However, the value of creating actions of the firms in the form of accrual management and real earnings management based on discretionary expense are less likely to significantly contribute to shape the overvaluation. The findings are helpful for regulators to improve supervision to real earnings management based on overproduction and the use of the Big Four auditors to prevent any potential value creation that leads to misvaluation in the market, as well as for professionals, investors and analysts to evaluate the quality of accounting numbers, select a portfolio of stocks, and make lending decisions. Unlike any previous studies highlighting the consequences of overvaluation and focusing on predicting the occurrence of overvaluation as a result of earnings management practices, this study mainly focuses on the earnings management as the cause of the overvaluation in the form of variables of accrual management and real earnings management based on discretionary expenses and overproduction.

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“…Moreover, Davydov et al (2014) states that debt financing is a key element in a firm's choice of its capital structure. By generating revenues that would not have been reached without additional funding, external financing in a form of debt or equity capital allows firms to increase firm value, which is traditionally considered an ultimate goal of every business.…”

Section: Difference In the Extent Of Utilization Of Financing Strategiesmentioning

confidence: 99%