Measuring the Firm's Performance: Accounting Profit versus Market Value

Hax, Herbert

doi:10.1628/0932456032584586

Cited by 8 publications

(6 citation statements)

References 1 publication

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Rather, we assess the effect of crime on profitability using annual profit and firm level investment as measurements for firm's growth. According to Hax [14], using the profit (accounting profit) as performance indicator raises the issues of separation of periodsprofit is calculated for only a single period-and the possibility of manipulation by the management, making it necessary to combine both profit (accounting) and market value as complementary measurement of performance. Still, profit serves to create incentives and appears to be a good indicator for our investigation.…”

Section: Literature Reviewmentioning

confidence: 99%

Crime, Self-Protection and Business Growth in Cote d’Ivoire

Kimou¹

2015

View full text Add to dashboard Cite

Cote d'Ivoire was considered as an island of stability and economic prosperity in a region of stagnation, and political turmoil. The situation was reversed in the early 2000, when a decade of instability led to a surge in crime and violence. Yet, very little was known about the economic consequences of crime at the firm level. This paper tested empirically the impact of crime on business activity in Cote d'Ivoire. Using a recent World Bank enterprise survey dataset and a Heckman two-step procedure we showed that crime and private provision of security negatively impacted firms' profit and investment.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Crime, Self-Protection and Business Growth in Cote d’Ivoire

Kimou¹

2015

View full text Add to dashboard Cite

show abstract

“…The exposure to market risk is commonly in the form of fluctuations in interest rates, foreign exchange rates, share prices, and commodity prices [ 22 ]. Among these forms of market risk, share price fluctuations have a large effect on market asset value (Allen & Powell, 2012), a market-based measurement of firm performance [ 23 ]. Therefore, capturing the effect of market risk on firm performance through equity price fluctuations is practical work, especially during extreme events [ 24 ].…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Market risk, financial distress and firm performance in Vietnam

2023

PLoS ONE

View full text Add to dashboard Cite

In 2021, when the Covid-19 pandemic had a severe impact on the economy, a significant number of enterprises in Vietnam temporarily suspended doing business. Previous studies have focused on either model for predicting bankruptcy and financial distress or measuring market risk during extreme events. The effects of market risk and financial distress on a firm’s performance have largely been ignored in the literature, particularly in Vietnam. This study examines the effects of market risk, measured using the conditional value-at-risk technique and financial distress proxied by the interest coverage ratio (ICR) on firm performance for 500 nonfinancial listed firms in Vietnam from 2012 to 2021. We also estimate the optimal ICR for Vietnam’s listed firms. Two estimation techniques are used: dynamic panel models (two-step difference–and system–generalized method of moments) and panel threshold regression. We find that increased market risk reduces firm performance. However, a higher ICR (lower financial distress) also improves a firm’s performance. With increased market risk, the financial performance of firms with a high ICR deteriorates significantly.

show abstract

“…For a long period of time, questions have been discussed about the choice of the base and tools for verification of the company's performance (efficiency) in the accounting system. This line of research is aimed at comparing the accounting profit indicator with the market value criterion (Hax, 2003), that is the debate lies in the coordinates of historical and just value discussions. Some of the authors support accounting for fair value and indicate the erroneous application of present value in the modern economy, however, arguing for the need to develop an alternative conceptual framework (Rayman, 2007).…”

Section: Integration Of Accounting and Management Analytics: From Pub...mentioning

confidence: 99%

Methodological tools in the processes of income and expenditure accounting: Contemporary discussions and developments in Galicia at the turn of the century

Lemishovska

2023

EEM

View full text Add to dashboard Cite

Analytical reviews at the international level highlight the issue of the quality of public reporting information on the performance of companies and their economic potential. The component and subject of these discussions is the use of alternative methods in the accounting system – “comparison of income and expenses” and the “balance sheet approach”, which significantly affect the results of the calculated indicators. The purpose of this study is to formulate proposals for solving existing problems and analyse the best practices of accountants in Eastern Galicia in the second half of the 19th and mid-20th centuries to identify successful ideas for their use in modern research. The study uses a system of general scientific methods and specific techniques to clarify the role and significance of accounting information in the architectonics of the modern economy. The scientific results substantiate the author's opinion that the information presented based on the approach of coordinating (comparing) income and expenses objectively reveals the level of performance of modern companies, and therefore, more meets the real needs for management processes and the functioning of the market mechanism. The paper substantiates that the methodology of “coordination of income and expenses” should be given more weight in accounting theory and practice, and the results obtained on its basis should take a more significant position in the system of market analytics criteria. The balance sheet approach with its fair value principles in the accounting system is considered necessary, but its application should be considered as an additional tool for providing information to investors and counterparties of the market process. On its basis, companies provide the capital and investment markets with information in their public financial statements about the state and structure of their actual financial and economic potential. The scientific results also include the methodological developments identified and evaluated in past studies, which are reasonably recognised as applicable to modern realities. The paper is valuable because the introduction of the studied methods into practice based on their proposed parity use and some provisions from past developments regarding the measurement of income and expenses will positively affect the information content and transparency of public reporting of modern companies

show abstract

Measuring the Firm's Performance: Accounting Profit versus Market Value

Cited by 8 publications

References 1 publication

Crime, Self-Protection and Business Growth in Cote d’Ivoire

Crime, Self-Protection and Business Growth in Cote d’Ivoire

Market risk, financial distress and firm performance in Vietnam

Methodological tools in the processes of income and expenditure accounting: Contemporary discussions and developments in Galicia at the turn of the century

Contact Info

Product

Resources

About