The effect of government contracts on corporate valuation

Esqueda, Omar A.; Ngo, Thanh; Susnjara, Jurica

doi:10.1016/j.jbankfin.2019.07.003

Cited by 20 publications

(12 citation statements)

References 51 publications

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“…This result indicates that reasons for gaining government contracts go beyond firm productivity. Consistent with previous empirical evidence, firms that obtain government contracts have lower corporate valuation (Esqueda et al, 2019) and international performance (Lee and Weng, 2013) than firms that do not sell goods and services to governments. In the next section, we provide a conceptual framework that examines more specifically how the level of corruption can moderate the effect of firm productivity on the likelihood of securing a government contract.…”

Section: Background Literaturesupporting

confidence: 85%

Firm productivity and government contracts: The moderating role of corruption

Vendrell‐Herrero

Darko

Vaillant

2022

Socio-Economic Planning Sciences

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Section: Background Literaturesupporting

confidence: 85%

Firm productivity and government contracts: The moderating role of corruption

Vendrell‐Herrero

Darko

Vaillant

2022

Socio-Economic Planning Sciences

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“…This is also a performance indicator, but differs from ROA. Tobin's q, which is usually formed as a firm's market value to total book value, appears in Ayturk, Gurbuz and Yanik (2016); Cheng, Chan and Leung (2018) and Esqueda, Ngo and Susnjara (2019) as a measurement for firms' value in corporate finance. Other researches as Martínez-Sola, García-Teruel and Martínez-Solano (2013); Dahya, Dimitrov and McConnell (2008), Saddour (2006) and Bai et al (2004) suggest using market-to-book ratio as another proxy for Tobin's q.…”

Section: Market Based Measurement Of Firm Performancementioning

confidence: 99%

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Pham¹,

Huynh²

2020

Acta Univ. Agric. Silvic. Mendelianae Brun.

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The aim of this study is to examine the effect that trade credit investment has on firms' profitability. The characteristics of this relationship have not been dealt with in depth for manufacturing firms. We use panel data for a total of 227 Vietnamese publicly listed manufacturing firms for the period 2005–2017. Different econometric estimation techniques such as the feasible generalized least squares, fixed effects and random effects and different calculation of firm performance such as non market-based measure (return on assets) and market-based measure (Tobin's q) are employed to validate the consistent results. The robust results confirm a statistically significant inverted U-shaped relationship between trade credit investment and profitability.

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“…Although, government contractors have lower risk and therefore a lower cost of equity, which the authors explain by the more stable cash flows as an effect of the government as a main customer. Those more stable cashflows seem to weigh more heavily than "any increase in risk due to greater information asymmetry and agency costs" according to Esqueda et al (2019). Esqueda et al (2019) also found that companies, which are predominantly government contractors, tend to have lower valuations than firms without those government contracts.…”

Section: Impact Factor 2: How Innovation Influences a Company's Valuementioning

confidence: 99%

“…Those more stable cashflows seem to weigh more heavily than "any increase in risk due to greater information asymmetry and agency costs" according to Esqueda et al (2019). Esqueda et al (2019) also found that companies, which are predominantly government contractors, tend to have lower valuations than firms without those government contracts. On the downside, however, firms that mainly sell their products to the government have a significantly lower sales growth, compared to other companies, which leads to the lower net valuation, as stated above.…”

Section: Impact Factor 2: How Innovation Influences a Company's Valuementioning

confidence: 99%

Startup valuation reassessed: against celebrity, sustainability and state intervention

Hoffmann

2023

JEET

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Purpose The purpose of this study is to showcase that the valuation of startups is still considered to be more “art than science”. Moreover, such non-rigorous approaches often lead to valuations, which turn out to be too high, which in turn has become a well-known phenomenon to a broader audience due to shining examples such as We Work. This is reason enough to revisit the important topic of where we stand today with startup valuation procedures and methodologies. Design/methodology/approach Literature synthesis and exploratory analysis. Findings While some studies describe sound results about how to assess startups, what the authors found was that many questions remain open or have not been covered at all. This is the reason why the authors needed to apply a substantial amount of reasoning in the analysis of studies, which do not exactly deal with startup companies. The authors provided some interesting impulses for future research. Originality/value Based on an original overview of the current state of research about the valuation of startup companies, this paper makes the following principal contribution to both the literature and practice: on the one hand, the authors assess four impact factors on startup values critically; on the other, the authors provide an outlook on promising future research avenues.

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The effect of government contracts on corporate valuation

Cited by 20 publications

References 51 publications

Firm productivity and government contracts: The moderating role of corruption

Firm productivity and government contracts: The moderating role of corruption

The Impact of Trade Credit Investment on Manufacturing Firms' Profitability: Evidence from Vietnam

Startup valuation reassessed: against celebrity, sustainability and state intervention

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