ENTERPRISE VALUE, ECONOMIC AND POLICY UNCERTAINTIES: THE CASE OF US AIR CARRIERS

1999

We would like to thank our colleagues at KLM Royal Dutch Airlines and the Tinbergen Institute for their helpful comments and suggestions. We acknowledge the support of Leading Market Technologies technical desk in creating the software tools.

2020

This study aims to examine the effect of Enterprise Risk Management (ERM), earnings volatility and company characteristics such as asset tangibility, company size, company growth, profitability, company age, liquidity and leverage on firm value. The implementation of Enterprise Risk Management in the company is useful for managing risks that may occur in the company's operational activities. Enterprise Risk Management is an effort to improve the quality of risk management implementation that can mitigate risks that arise so that companies are not only able to survive but also excel in business competition. Thus, the application of ERM is alleged to have an influence on firm value. Meanwhile, earnings volatility is a picture of the level of business risk faced by the company so that it can affect the value of a company. The implementation of ERM, the occurrence of earnings volatility and the characteristics of the company itself can be an indication of the company's risk whic...

Journal of Corporate Finance, 2002

This study examines the sensitivity of equity values of oil producers to changes in the uncertainty of future oil prices. We document that this sensitivity is negatively correlated with a firm's debt ratio and its production costs. These results indicate that companies that are more likely to experience financial distress or underinvestment from low cash flows are adversely affected by increases in the uncertainty of future cash flows. We conclude that corporate risk management can increase shareholder value by reducing the expected costs of financial distress and underinvestment.

SSRN Electronic Journal, 2020

* We are indebted to Giacomo Toscano and Iacopo Raffaelli for helpful comments and fruitful discussion. We are grateful to participants at the Quantitative Finance Workshop Qfw2020 (Napoli, January 28-30, 2020). We also thank David Hirshleifer and Danling Jiang for providing us the UMO factor data.

Humanities and Social Sciences Communications

To date, there has been limited research undertaken into firm value determinants in the air transport industry, one of the most essential sectors for global business. In view of this, in this study, we review and synthesise the literature that focuses on the value of firms in this sector and discuss conceptually and empirically the determinants influencing airlines’ stock values. Our main objective is to widen our understanding of the current state of research on the firm value of air transport companies. Using the systematic literature review (SLR) approach, we classify 173 papers published from 1984 to 2021. We find considerable changes in academic interest in the topic over the time period analysed, especially as a consequence of crisis-induced market crashes. In addition, we classify the main research themes relating to airlines’ market value, identify gaps, and introduce potential future research avenues in this area. Among the themes identified, the adjustment in the industry-...

Risk Management, 2016

This article explores if and how Enterprise Risk Management (ERM) influences market values of large US non-financial companies in the period from 2003 to 2012. This is the first empirical study that brings evidence on the effect of ERM on the value of non-financial companies and that explores not only the market reaction to the ERM announcement, but also the investors' perception of long-term ERM usage. Our research shows evidence that ERM has a positive effect on the market value for a short period of time following the announcement of ERM implementation. After 2.67 years, the market premium for ERM companies fades away, so a company does not have a higher market value just because it has ERM. Our results indicate that ERM does not contribute to a company's market value in the long term.

Jurnal Ilmiah Akuntansi dan Bisnis, 2021

This study analyzes a company’s financial condition on firm value. We also evaluated the difference in firm value between corporate sectors affected and unaffected by the COVID-19 pandemic. The regression analysis model used is the random effect model as well as the difference-in-difference technique. The study uses data from the company’s interim financial reports for the first and second quarters of 2018, 2019, and 2020. We found that firm size and leverage influence firm values. This applies to companies in the affected sectors, such as hotel, restaurant, and tourism sub-sectors, and unaffected sectors, such as health, pharmacy, and telecommunication sub-sectors. We also found that firm values in affected and unaffected sectors, before and during COVID-19, do not significantly differ. Keywords: COVID-19, financial condition, firm value

SSRN Electronic Journal, 2000

This paper investigates and models the relationship between firm value and risk. In order to model the impact of operating and financial leverages and intrinsic business risk on firm value we extend both the theoretical and empirical issues of and . We use panel data to estimate operating and financial leverage degrees and 403 sample non-financial USA firms for the period from 1995 to 1999. Our empirical findings suggest that the degree of operating leverage and intrinsic business risk explain a large portion of the variation of excess return in dollar when firm's sales are negatively correlated with the market portfolio. In contrast, when firm's sales are positively correlated with market portfolio, the degree of operating leverage is embedded in the intrinsic business risk and a significant portion of cross-sectional variation in the excess return in dollar can be explained by intrinsic business risk and the degree of financial leverage.

Review of business Management, 2020

Purpose – This paper examines the ability of Lyle, Callen, and Elliott's (2013) valuation accounting model in estimating expected returns (cost of capital) in the Brazilian capital market. Design/methodology/approach – To test the model's ability to generate expected returns (cost of capital), as well as to predict prices, Fama-Macbeth's (1973) monthly cross-sectional regressions were used. Sensitivity to different risk factors, particularly to the whole (systematic) economy risk, was also tested to forecast returns using a two-stage approach. Findings – The results showed that even under different conditions, the accounting model evaluated has unsatisfactory performance with emerging country data, during the analysis period. Moreover, the sensitivity of return to the risk factors employed was not a determinant for the forecasts. However, the findings showed consistency for price forecasting, and the evidence was consistent with the work applied in the American market. O...

JOURNAL OF ECONOMICS, FINANCE AND MANAGEMENT STUDIES

The study aims to determine the effect of Investment Opportunity Set, Liquidity, and Company Size both directly and indirectly on Company Value in companies that revalued assets listed on the Indonesia Stock Exchange in the 2016-2019 period. The research method used is a hypothesis testing method with a quantitative approach. The statistical test used is multiple linear regression with the use of partialsignificance test for hypothesis testing. The number of samples studied was 136 using panel data. The results showed that the direct effect of investment opportunity set and liquiditypartially had no effect on firm value, but firm size partially had an effect on firm value. While the indirect effect of investment opportunity set, and company size partially affect the value of the company. Liquidity partially has no effect on firm value through revaluation of fixed assets as an intervening variable.