The impact of innate accruals quality on the future market value moderated by dividend policy

Siladjaja, Muljanto; Anwar, Yuli

doi:10.1108/ajar-04-2020-0026

Cited by 5 publications

(5 citation statements)

References 32 publications

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“…Otherwise, if subsequent net earnings return to the level of previous years, the enterprise is likely to reduce the dividend amount, which the capital market may perceive as a negative signal. As a result, an enterprise's market value may decrease (Siladjaja & Anwar, 2020). This finding is in line with signaling theory (Bhattacharya, 1979) and demonstrates that enterprises attempt to maintain dividends at the levels from previous years, even when their profitability increases.…”

Section: Resultssupporting

confidence: 79%

“…The literature on the determinants of dividend payments is extensive and examines various fundamental factors that describe a company's financial condition (Dewasiri et al, 2019;Benlemlih, 2019;Siladjaja & Anwar, 2020;Lin & Lee, 2021;Huang et al, 2022), especially in terms of liquidity (Bilyay-Erdogan et al, 2023), financing structure (Aivazian et al 2003;Michael, 2013;Chang, Kang, & Li, 2016;Adjaoud & Hermassi, 2017;Benlemlih, 2019), size (Denis & Osobov, 2008;Matos et al, 2020), and age (Benlemlih, 2019). Another stream of the literature is built upon the assumption that the institutional environment in which an enterprise operates can influence internal decisions regarding the payout policy (Aivazian et al, 2003;La Porta et al, 2000).…”

Section: Literature Reviewmentioning

confidence: 99%

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ESG performance and dividend stability of the world’s largest enterprises

Matuszewska-Pierzynka,

Mrzygłód,

Pieloch-Babiarz

2023

JEMI

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PURPOSE: Theoretical and empirical research on corporate sustainability focuses on the relationship between environmental, social, and governance (ESG) performance and profitability or market value; little attention is given to describing their effect on dividend policy. Therefore, the main purpose of this paper is to address the research gap by identifying the relationship between corporate sustainability performance and the stability of dividend payouts. To achieve this goal, we formulated a general research hypothesis that there is a positive link between an enterprise’s ESG performance and its propensity to pay stable dividends. This research hypothesis is operationalized by the following five specific hypotheses: (1) the link between the overall ESG score and the propensity to pay stable dividends is positive; (2) the link between the environmental pillar score and the propensity to pay stable dividends is positive; (3) the link between the social pillar score and the propensity to pay stable dividends is positive; (4) the link between the governance pillar score and the propensity to pay stable dividends is positive; (5) the link between the ESG controversies score and the propensity to pay stable dividends is positive. METHODOLOGY: The hypothesis was empirically verified using a logistic regression model among the world’s largest non-financial enterprises listed in the Global 500 of 2021 for the years 2012–2021. The specifications of the general model include sustainability variables such as environmental, social, and governance pillar scores, as well as the ESG controversies score, which measures an enterprise’s exposure to environmental, social, and governance controversies and negative events reflected in global media. The financial ratios, such as a return on assets, current ratio, and debt-to-equity ratio, are considered control variables in the model specifications. The research was extended by implementing descriptive statistics and Pearson correlation coefficients. All required financial and sustainability data were retrieved from the London Stock Exchange Group (LSEG) Eikon database. FINDINGS: The results of the estimation revealed that: (1) the effect of integrated ESG activities on payout stability is statistically significant and negative only in model specifications without the ESG controversies; (2) the effect of the environmental dimension is statistically significant and negative only when other particular ESG pillars are not considered; (3) the effect of the social dimension is statistically significant and negative, only when the governance dimension and the ESG controversies are not considered together in the same model specification; (4) the effect of the governance dimension is statistically significant and positive only if other particular pillars are considered together in one model specification, both with and without the ESG controversies; (5) the effect of the ESG controversies is statistically significant and positive in each model specification. Therefore, the general research hypothesis cannot be confirmed because only the fifth specific research hypothesis can be positively verified in all model specifications. IMPLICATIONS: Further research should be conducted on the relationship between corporate sustainability performance and dividend policy. It should consider not only commonly applied ESG scores but also the ESG controversies score, which was statistically significant in this research. Governments and international organizations should cooperate with companies that provide ESG data to make ESG scores, including the ESG controversies score, publicly available to all stakeholder groups, which would help to reduce the information gap. Managers should pay more attention to increasing the visibility of ESG initiatives from the perspective of risk, which they allow to avoid controversies in particular corporate sustainability dimensions. ORIGINALITY AND VALUE: The value added of this paper is that it investigates the relationship between ESG performance and payout policy, which was not thoroughly explored in previous studies, especially in the context of an enterprise’s controversial ESG activities. To fill the research gap in the literature, the authors incorporated the ESG controversies score as an independent variable in the model specifications, which is a novelty in research on dividend policy.

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Section: Resultssupporting

confidence: 79%

Section: Literature Reviewmentioning

confidence: 99%

ESG performance and dividend stability of the world’s largest enterprises

Matuszewska-Pierzynka,

Mrzygłód,

Pieloch-Babiarz

2023

JEMI

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Section: Methodssupporting

confidence: 79%

Section: Literature Reviewmentioning

confidence: 99%

Untitled

2023

JEMI

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The JOURNAL OF ENTREPRENEURSHIP, MANAGEMENT AND INNOVATION is an interdisciplinary, double blind-reviewed journal, emphasizing theoretical and empirical articles in entrepreneurship, management, innovation and related fields. The journal is published both in printed form and on-line at www.jemi.edu.pl. THE ENTREPRENEURSHIP AREA OF THE JOURNALThe entrepreneurship area of the journal covers the three major topics: 1) venture creation and small business, 2) the impact of entrepreneurship on economic growth including local and regional development, and 3) entrepreneurial attitudes and motives. We invite original papers of theoretical and empirical nature, rooted in the disciplines of economics, management, sociology, political science, and psychology. The interdisciplinary research is encouraged to assure a comprehensive approach to the topics discussed and to advance both theory and practice. THE MANAGEMENT AREA OF THE JOURNALManagement, as a thematic scope of the journal, focuses on theoretical and empirical considerations of various areas, such as: strategic management, operation or production management, human resource management, information and management, contemporary management problems, new methods and management tools, new forms of organization and management, new threats in management, or new challenges in the organization's environment. THE INNOVATION AREA OF THE JOURNALThe innovation area of the Journal's focus will emphasize a broad range of topics and approaches, including (but not limited to): 1) role of private and public sector in development and diffusion of innovations, 2) product, process and business model innovations, 3) profiles of innovative products, structures and processes, aimed at improving management practice and providing inspiration for entrepreneurs, 4) comparative analyses of national, regional policy or sector issues, such as R&D trends, patents, citations etc., 5) theoretical work on economic, organizational and scientific aspects of innovation, encouraging the search for inspirations from various disciplines, including natural sciences, arts and humanities. THE ENTREPRENEURIAL FINANCE AREA OF THE JOURNALThe entrepreneur or entrepreneurial firm, the institutions providing finance to the entrepreneurs, and the different types of financial sources used by the entrepreneurial firms or investors. Among the areas of our special interests might be enumerated: accounting and corporate finance, financial market as a background for SME development, entrepreneurial finance, regulatory and supervisory aspects related to corporate finance.

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“…By using the higher standard accrual size quality is resulted in low accrual usage. The higher number of quality financial reporting is resulted in high prediction of the market value in the future (Siladjaja and Anwar, 2020). The financial report includes financial statements and informative instruments or procedures.…”

Section: Financial Reporting Qualitymentioning

confidence: 99%

Valuation of financial reporting quality: is it an issue in the firm’s valuation?

Asyik¹,

Agustia

Muchlis

2023

AJAR

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Purpose The purpose of this study is to test the determinant of financial report quality and its consequences to the company values.Design/methodology/approach This research is using a quantitative approach and testing a theory by formulating some hypotheses. The sample of this study is 85 go public companies listed in the Indonesia Stock Exchange, for a 5-year observation period from 2016 to 2020. Hence, it has a total of 425 observations. Data were analyzed using path analysis.Findings The results found that innate factors from financial reporting quality (FRQ) consists of dynamic factors (operation cycle and sales volatility) as well as static factors (firm’s size, FS). These factors help to achieve FRQ and are able to provide a positive response to the market. On the other hand, static factors (firm’s age, FA) and institution risk factors (leverage) are not able to produce FRQ. Thus, it cannot be considered as an economic decision maker for an investor.Practical implications Research implications include theoretical and practical implications. Theoretical implications prove that the valuation of clean surplus theory, which shows the market value of the company, is reflected in the components of the financial statements. This study also uses more than one quality of financial reporting. The practical implication of the research is that the research results are expected to provide information for the company’s management, to fulfill quality financial reporting and so that the market or investors will respond positively to these conditions. In addition, quality financial reporting information provides benefits for investors and capital market analysts (consisting of investors, brokers and market securities analysts) in determining investment decisions. The Financial Services Authority is also able to improve the implementation of corporate governance practices in Indonesia, through reform of the framework supervision of the financial services sector.Originality/value This research examines the determinants of FRQ and its consequences on firm’s value (FV). Innate factors proxies from FRQ include dynamic factors (operation cycle and sales volatility), static factors (FS and FA) and institution risk factors (leverage). A follow-up study on the value of the company because it shows the magnitude of the market response (financial statement users) on the quality of financial reporting, which is reflected in FV, the originality of this research is that the object of research is carried out in developing countries, specifically in Indonesia, because most of the previous research was carried out in developed countries.

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The impact of innate accruals quality on the future market value moderated by dividend policy

Cited by 5 publications

References 32 publications

ESG performance and dividend stability of the world’s largest enterprises

ESG performance and dividend stability of the world’s largest enterprises

Untitled

Valuation of financial reporting quality: is it an issue in the firm’s valuation?

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