The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence

Salehi, Mahdi; Zimon, Grzegorz; Arianpoor, Arash; Gholezoo, Fatemeh Eidi

doi:10.3390/jrfm15040170

Cited by 36 publications

(31 citation statements)

References 66 publications

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“…The results are helpful in cash management decisions to minimize the agency issue and to avail investment opportunities. Given the importance of investment efficiency in the Iranian economy development (Salehi et al , 2022), this study can help investors to financial analyze and identify the company investment behavior in the Iranian economic environment.…”

Section: Discussionmentioning

confidence: 99%

The impact of managerial attributes on cash holding and investment efficiency and the mediator role of cash holding

Arianpoor

Mehrfard

2022

JIABR

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Purpose The present study aims to explore the impact of managerial attributes on cash holding and investment efficiency and the mediating role of cash holding for companies listed on the Tehran Stock Exchange. Design/methodology/approach Information about 178 companies in 2014–2021 was examined. In the present study, managerial overconfidence, managerial myopia and managerial ability were considered as the managerial attributes. Findings The present findings showed that managerial attributes (i.e. overconfidence, myopia and ability) have a significant effect on investment efficiency. In addition, cash holding has a significant positive effect on investment efficiency. Furthermore, cash holding plays a mediating role in the relationship between managerial attributes and investment efficiency. Originality/value There is a gap in the impact of managerial attributes on cash holding and investment efficiency and investigating the mediating role of cash holding. This gap creates an opportunity for studying these variables in depth. The present study contributes to the identification of factors influencing investment efficiency to advance future studies and support practical efforts. This study contributes to a better understanding of the effect of managerial attributes on investment decisions in the context of diverging opinions about manager-specific effects on company’s outcomes.

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Section: Discussionmentioning

confidence: 99%

The impact of managerial attributes on cash holding and investment efficiency and the mediator role of cash holding

Arianpoor

Mehrfard

2022

JIABR

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“…INS: institutional ownership equals the percentage of shares with institutional owners (Salehi et al , 2022).…”

Section: Methodsmentioning

confidence: 99%

Auditor industry specialization and cost of equity on earnings management: the moderating role of institutional ownership

Arianpoor

Farzaneh

2023

IJLMA

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Purpose This study aims to explore the moderating role of institutional ownership in the impact of auditor industry specialization and the cost of equity on earnings management in Tehran Stock Exchange. Design/methodology/approach A total number of 198 firms were assessed in this study from 2014 to 2021. In this study, both accrual earning management (AEM) and real earnings management (REM) have been included. The industry-adjusted earnings price ratio and Gordon Growth Model were used for the cost of equity capital. In addition, auditor’s within-industry market share was used as a proxy for auditor industry specialization. Findings The results showed that institutional ownership positively moderates the impact of auditor industry specialization on AEM/REM. Furthermore, institutional ownership positively moderates the impact of cost of equity on AEM/REM. Hypothesis testing based on a robust regression and t + 1 test were also used for the results. Originality/value Previous studies have reported mixed results of this empirical question whether institutional ownership actually monitors managers and control earning management, considering the auditor industry specialization and the cost of equity. To the best of authors’ knowledge, this is a pioneering study to fill the existing gap. This study would not only benefit companies to manage financial and strategic decisions more efficiently but also help national and international society apply effective mechanisms to assist companies in decreasing earning management and increasing the firm performance, and try to push the market into a favorable direction.

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“…This is also similar to the findings by Pramartha et al (2020) that investment decisions have a positive effect on firm value but with a different object, which is BUMN companies listed on the Indonesia Stock Exchange. Finally, findings by Salehi et al (2022) found that firm value is reflected in the company's stock price. When stock price information improves, capital allocation is carried out more efficiently, increasing company investment efficiency, and has an impact on the increasing firm value on the Tehran Stock Exchange.…”

Section: Introductionmentioning

confidence: 95%

“…Increasing firm value through investment decisions has been a topic of extensive research and has been the subject of debate in recent decades (Mahirun and Kushermanto, 2018;Mousa et al, 2021;Triani and Tarmidi, 2020). This is due to the increase in the role of corporate investment decision-making to maximize shareholder wealth by optimizing firm value, particularly in developing countries (Hidayat et al, 2019;Nouman et al, 2022;Salehi et al, 2022). Previous research indicates an increase in firm value through corporate social responsibility (Butt et al, 2020;Hatane et al, 2021;Dewi et al, 2021), funding decisions (Uzliawati et al, 2018;Luu, 2021;Lawson and Osaremwinda, 2019), dividend policy (Trinh et al, 2022;Ali, 2022), or other corporate actions, such as mergers and acquisitions (Gao and Bao, 2022;Wang et al, 2021), as well as stock splits (Hendra et al, 2020;Podgórski and Pasierbek, 2020).…”

Section: Introductionmentioning

confidence: 99%

Investment Decisions of Energy Sector Companies on the Indonesia Stock Exchange: Theory and Evidence

Alghifari¹,

Gunardi

Suteja

et al. 2022

IJEEP

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This paper focused on strategic corporate financial decisions regarding investments to increase firm value moderated by profitability in emerging markets. The analytical method used was panel data analysis, with a total number of observations of 260 energy sector companies on the Indonesia Stock Exchange in 2019-2021. The results of the Chow Test, Hausman Test, and Lagrange Multiplier Test show the selected random effect model. The model shows that there is an effect of investment decisions on firm value in a positive direction and the moderating role of profitability strengthens this effect. The results of the robustness check show that the research model is still consistent with previous findings. Investment decisions have an effect on firm value, and profitability moderates this effect, both in the assumption of changes in control variables or model estimation using quantile regression. Our findings are in line with the idea of signaling theory that information on the company’s investment decisions is a positive signal that the company has good growth opportunities or prospects so that it will increase the firm value and ultimately have an impact on the prosperity of shareholders. Furthermore, profitability strengthens the positive signal of the company’s reputation in the eyes of investors.

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The Impact of Investment Efficiency on Firm Value and Moderating Role of Institutional Ownership and Board Independence

Cited by 36 publications

References 66 publications

The impact of managerial attributes on cash holding and investment efficiency and the mediator role of cash holding

The impact of managerial attributes on cash holding and investment efficiency and the mediator role of cash holding

Auditor industry specialization and cost of equity on earnings management: the moderating role of institutional ownership

Investment Decisions of Energy Sector Companies on the Indonesia Stock Exchange: Theory and Evidence

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