firm value – Jurnal Pengurusan

The Effect of Enterprise Risk Management on Firm Value: Evidence from Malaysian Technology Firms

sufizulkarnain01 — Sat, 08 Oct 2022 17:06:24 +0000

This paper aims to examine the relationship between ERM and firm value in Malaysia. In the past literature, ERM had been argued to increase firm value but empirical evidence shows mixed and inconclusive results. Using sample from 2004 to 201 2, this paper furthers the analysis on the relationship between ERM and firm performance among technology firms in Malaysia. Indeed, technology industry is the fastest growing and a volatile industry, which requires continuous innovation. These make technology firms more prone to risk exposure. In analyzing this issue, dynamic panel data is employed to allow cross-sectional and time series analysis. Our results show that the implementation of ERM in the previous year has strong negative relationship with firm value at 1 percent significance level. It supports the argument that the effect of ERM is not immediately realized as well as entails high implementation cost. The findings provide useful input and insight in formulating new policy in relation to corporate governance, particularly ERM in Malaysia.

Are Family Members Expropriated-Monitoring Shareholders? Non-Linear Evidence from the Saudi Arabia

syafiqahazieati — Sat, 08 Oct 2022 09:17:28 +0000

As family businesses grow worldwide, the significant role of family shareholders on firm value becomes questionable. This study seeks to address this issue and provides new evidence on the non-linearity of family ownership-firm value relationship, based on 375 firm-year observations of 75 public listed companies in Saudi Arabia over five consecutive years (2007-2011). Interestingly, we provided evidence that the behavior of the Saudi families is changeable between expropriation and monitoring during the life of the business depending on the percentage of family ownership. We found sufficient evidence that the turning point occurs at the 28% family ownership. This confirmed the expropriated-monitoring behavior of family shareholders in their businesses. These results were robust with respect to different family definitions and analyses. Our findings suggested that investors should not undervalue Saudi family firms due to family ownership per se. At a certain degree of ownership, the benefits of Saudi family monitoring actually exceed the costs. The results suggested that there may be a need to encourage policy makers in Saudi Arabia to impose the full disclosure of firms’ ownership information, including the percentage of ownership and the identity of owners.

Impact of Foreign Currency Derivatives on Firm Performance: Evidence on Shari’ah and non-Shari’ah Compliant Firms

khairul23 — Fri, 07 Oct 2022 01:00:01 +0000

Hedging practices among Shari’ah compliant firms (ShC) are still not well explored and firms in Malaysia is very much lag behind in derivatives usage against firms in the developed countries. This study investigates the influence of financial derivatives usage on the value of Shari’ah and non-Shari’ah compliant firms (non-ShC) in Malaysia and compares the influence of derivatives usage on the value between the two categories of firms. To meet its objective, Generalized Method-of-Moment estimator (System-GMM) is employed on a set of panel data from 2000-2017. This study covers 200 firms engaged in derivatives which 59 firms are ShC firms and 141 are non-ShC firms. This study finds financial derivatives contribute positively to the value of Shari’ah compliant but negatively to the non-ShC firms. This study concludes that ShC performed better than its counterpart in risk management using derivatives. The findings enrich the current literature on the Islamic financial market and contribute to a better understanding relating to hedging activities. This study offers new evidence on risk management using derivatives in both Shari’ah and non-ShC firms and the importance of industrial diversification on firm value. This study suggests that the non-involvement in non-ShC firm’s activities contributes to the lower risk profile hence a more effective risk management of the Shari’ah compliant firms.