The role of internally generated goodwill in choosing areas and objects of investment
-
Author(s)Svitlana LabunskaLink to ORCID Index: https://orcid.org/0000-0002-0989-6806
,
Ľuboš CibákLink to ORCID Index: https://orcid.org/0000-0003-3881-7924
,
Mykola SidakLink to ORCID Index: https://orcid.org/0000-0001-7173-3197
,
Marharyta SobakarLink to ORCID Index: https://orcid.org/0000-0003-2531-907X
-
DOIhttp://dx.doi.org/10.21511/imfi.20(2).2023.19
-
Article InfoVolume 20 2023, Issue #2, pp. 215-231
- 463 Views
-
193 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The purpose of the study is to develop and test in practice the method of analyzing the relationship between the formation of internally generated goodwill and investment attractiveness of an enterprise based on econometric modeling in order to improve the investment management process. Attracting additional investments, both for Slovakia and Ukraine, requires the identification of promising objects of investment. Assessment of enterprise’s potential cannot be accurately performed on the base of financial statements, which reflect only the state of assets. It is necessary to take into account the prospects for development of this business unit in the future, that largely depends on effective functioning of management system. The success of business processes depends on how rationally managers use the resources of the enterprise and form the structure of assets adequate to the demands of the market. The article considers the problem of estimating the value of enterprises in order to attract investments based on internally generated goodwill, and determines the peculiarities of the formation and types of goodwill of a commercial enterprise. As the main research method, canonical correlation modelling was used to analyze data of Ukrainian machine-building enterprises for the period 2017–2020. As a result, the factors responsible for the formation of internally generated goodwill were identified and classified according to their economic nature. Correlation dependencies between groups of initial and resulting coefficients were calculated and the areas of enterprise management that have the greatest impact on the formation of its market value were identified.
- Keywords
-
JEL Classification (Paper profile tab)C51, G11, G31, M21, M49
-
References44
-
Tables2
-
Figures4
-
- Figure 1. Distribution of investment values and Global Innovation Index scores in Eastern Europe
- Figure 2. Distribution of GDP per capita values and Doing Business scores
- Figure 3. Industrial production dynamics and financial results of companies in Slovak Republic in 2021
- Figure 4. The system of indicators for the canonical analysis model to measure the impact of IGG on the investment attractiveness of an enterprise
-
- Table 1. Indicators for assessing the impact of factors of internally generated goodwill formation on the investment attractiveness of an enterprise
- Table 2. The most influential indicators in the factor systems of the studied enterprises
-
- Alves, A. C., Barbieux, D., & Reichert, F. M. (2017). Innovation and dynamic capabilities of the firm: defining an assessment model. Revista de Administracao de Empresas, 57(3), 232-244.
- Arianpoor, A. (2021). The Impact of Intangible Assets on Firm Performance: Evidence from an Emerging Economy. Iranian Journal of Accounting, Auditing & Finance, 5(2), 61-67.
- Beck, M., Junge, M., & Kaiser, U. (2017). Public Funding and Corporate Innovation (IPA Discussion Papers, No. 11196). Bonn: Institute of Labor Economics (IPA).
- Birca, I. P. (2022). Goodwill practical aspects. The USV Annals of Economics and Public Administration, 22(1(35)), 129-139.
- Bogatyrev, I., Topchiy, V., Koropatni, I., Kotliarenko, O., & Kofanov, A. (2019). Problems and perspectives for attracting investments in economy of Ukraine. Investment Management and Financial Innovations, 16(2), 195-205.
- Dimitru, A. P. (2022). Intangible Assets – An Important Resource for Enterprise Performance Management. Global Economic Observer, “Nicolae Titulescu” University of Bucharest, Faculty of Economic Sciences; Institute for World Economy of the Romanian Academy, 10(1), 107-111.
- Dogan, M., & Kevser, M. (2020). Analysis of the Relationship Between Intellectual Capital and Firm Performance: An Empirical Research on Borsa Istanbul. PressAcademia Procedia, 12, 21-26.
- Dovhan, Y. (2015). Assessment of the investment attractiveness. Finance, Accounting, Banks, 1(21), 235-244.
- Dudová, I. (2014). Social Protection as the Key Pillar of Social Systems in the European Union. Ekonomičnij časopis- XXI, 7-8(1), 36-39.
- Gierusz, M., Honko, S., Strojek-Filus, M., & Swietla, K. (2022). The Quality of Goodwill Disclosures and Impairment in the Financial Statements of Energy, Mining, and Fuel Sector Groups during the Pandemic Period – Evidence from Poland. Energies, 15, 5763.
- Gliznutsa, M. Y. (2016). Vyznachennnia skladovykh ta otsinka innovatsiinoho potentsialu rehionu [Determination of the components and assessment of the region’s innovation potential]. Tekhnologicheskiy audit i reservy proizvodstva – Technology audit and production reserves, 3/5(29), 11-14. (In Ukrainian).
- Grosu, V., & Cîrdei, T. (2022). Design of an econometric model for evaluation of goodwill for companies listed on regulated markets. European Journal of Accounting, Finance & Business, 10(2), 18-28.
- Gutkevych, S. (2019). Invest ment attractiveness of industries: features and trends. Baltic Journal of Economic Studies, 5(3), 50-58.
- Hajnišová, E., & Fekete, Á. (2013). Nárok a splatnosť pri provízii v slovenskej právnej úprave obchodného zastúpenia [Entitlement to sales commissions and its maturity in cases of commercial representation under Slovak law]. Obchodní pravo, 22(3), 98-105. (In Slovak).
- Hajnišová, E., & Gunárová, S. (2012). Es teismo precedentines teisesanalize, susijusi su pridetines vertes mokesčio lengvata Europos sąjungoje [Analysis of case-law of the Court of Justice of the European Union in matters concerning the deduction of valued added tax in the European Union]. Visuomenes saugumas ir viešoji tvarka, 6(8), 97-109. (In Slovak).
- Hellman, N. (2022). Discussion of Accounting for intangible assets: suggested solutions. Accounting and Business Research, 52(6), 631-640.
- Hellman, N., & Hjelström, T. (2022). The Goodwill Impairment Test under IFRS: Objective, Effectiveness and Alternative Approaches. Journal of International Accounting, Auditing and Taxation.
- Hudakova, M., & Adamko, J. (2016). Technical reserves in insurance and Slovak insurance market. Economic Annals-XXI, 162(11-12), 98-103.
- Ievdokymov, V., Ostapchuk, T., Lehenchuk, S., Grytsyshen, D., & Marchuk, G. (2020). Analysis of the impact of intangible assets on the companies’ market value. Naukovyi Visnyk Natsionalnoho Hirnychoho Universytetu, 3, 164-170.
- Invest Europe. (2022). 2021 Central and Eastern Europe Private Equity Statistics.
- Jantoń-Drozdowska, E., & Majewska, M. (2016). Investment attractiveness of central and Eastern European countries in the light of new locational advantages development. Equilibrium. Quarterly Journal of Economics and Economic Policy, 11, 97-119.
- Kharlamova, G. (2014). Investment attractiveness of Ukrainian regions: rating assessment and marketing promotion. Journal of International Studies, 7(1), 9-26.
- Labunska, S., Karaszewski, R., Prokopishyna, O., & Iermachenko, I (2019). Cognitive analytical tools for cost management of innovation activity. Problems and Perspectives in Management, 17(1), 395-407.
- Lopes, I. T., & Ferreira, C. F. P. (2021). Intangibles as innovative drivers for competitive businesses. International Journal of Business Innovation and Research, 24(2), 238-260.
- Malyarets, L. M., Iastremska, O. M., Herashchenko, I. M., Iastremska, O. O., & Babenko, V. O. (2020). Optimization of Indicators for Management of Enterprise: Finance, Production, Marketing, Personnel. Estudios de Economía Aplicada, 38(4), 13.
- Official site of the Statistical Office of the Slovak Republic.
- Pinto, H., & Fernández-Esquinas, M. (2018). What do stakeholders think about knowledge transfer offices? The perspective of firms and research groups in a regional innovation system. Industry and Innovation, 25(1), 25-52.
- Ponemon Institute LLC. (2022). Intangible Assets Financial Statement Impact Comparison Report 2022.
- Qureshi, M. J., & Siddiqui, D. A. (2020). The Effect of Intangible Assets on Financial Performance, Financial Policies, and Market Value of Technology Firms: A Global Comparative Analysis. Asian Journal of Finance & Accounting, 12(1), 26-57.
- Seo, S. H., & Kim, Y. J. (2020). Intangible assets investment and firms’ performance: evidence from small and medium-sized enterprises in Korea. Journal of Business Economics and Management, 21(2), 421-445.
- Serpeninova, Yu., Lehenchuk, S., Mateášová, M., Ostapchuk, T., & Polishchuk, I. (2022). Impact of intellectual capital on profitability: Evidence from software development companies in the Slovak Republic. Problems and Perspectives in Management, 20(2), 411-425.
- Shubita, M. F. (2022). Intellectual capital and industrial firms’growth: Evidence from Jordanian manufacturing listed firms. Problems and Perspectives in Management, 20(3), 325-334.
- Siller, H., & Cibák, L. (2016). Vedecké práce v zahraničných časopisoch registrovaných v databázach = Korruption und ihre gesamtwirtschaftliche Bedeutung. Kriminalistik, 70(1), 50-55. (In Slovak).
- Singh, K., Misra, M., Kumar, M., & Tiwari, V. (2019). A study on the determinants of financial performance of U.S. agricultural cooperatives. Journal of Business Economics and Management, 20(4), 633-647.
- Slezáková, A. (2020). Orgány dohľadu nad finančným trhom v Rakúsku a na Slovensku (porovnanie fragmentov právnej úpravy) [Authorities Supervising the Financial Market in Austria and Slovakia (A Comparison of Fragments of the Regulation)]. Právny obzor: teoretický časopis pre otázky štátu a práva, 103(2), 132-148. (In Slovak).
- Sudyn, Yu. (2015). Innovative methods of evaluating goodwill in increasing the competitiveness of the company. Przedsiębiorstwo i region, 7, 105-112.
- Teece, D. J. (2018). Dynamic capabilities as (workable) management systems theory. Journal of Management & Organization, 24(3), 359-368.
- Todorova, D., Gergova, N., Hristova, M., Kollar, V., Filip, S., & Filipova, L. (2019). Benchmarking Model – Intelligent Portfolio for Quality Measurement and Management of Education at Bulgarian and Slovakia Higher Schools. Sofia: University of Transport Todor Kableshkov.
- Us, Н., Malyarets, L., Chudaieva, L., & Martynova, O. (2018). Multi-criteria optimization of the balanced scorecard for the enterprise’s activity evaluation: management tool for business-innovations. Marketing and Management of Innovations, 3, 48-58.
- Vuković, B., Milutinović, S., Mijić, K., Krsmanović, B., & Jaksic, D. (2022). Analysis of financial performance determinants: evidence from the European agricultural companies. Custos eAgronegocio, 18(1), 285-306.
- Warnock, K. (2000). Arguing about goodwill. The Irish Accounting Review, 7(1), 101-135.
- World Bank Group. (2020). Doing Business 2020. Comparing Business Regulation in 190 Economies.
- World Intellectual Property Organization. (2021). Global Innovation Index 2021. Tracking Innovation through the COVID19 Crisis.
- Xu, J., & Zhang, Y. (2021). Does Intellectual Capital Measurement Matter in Financial Performance? An Investigation of Chinese Agricultural Listed Companies. Agronomy, 11, 1872.
-
Income smoothing and market performance: empirical study on manufacturing companies listed in Indonesia stock exchange
Kencana Dewi , Mukhtaruddin ,
Iqbal Agung Prayudha
doi: http://dx.doi.org/10.21511/imfi.15(1).2018.10
Investment Management and Financial Innovations Volume 15, 2018 Issue #1 pp. 106-119 Views: 1674 Downloads: 290 TO CITE АНОТАЦІЯIn the age of modern accounting, the era where income information is viewed to be no longer the main information that investor seeks, income smoothing is proven to be still existing. This study aims to find why income smoothing (IS) still exists in Indonesia Stock Exchange (IDX) by analyzing its effect on the market performance (MP). The study divides MP into three perspectives: market response is representing current investor; market risk (MR) is representing potential investor; and market value (MV) is representing the management. Purposive sampling method is applied in this study and 65 companies are examined throughout 2011–2013.
Using three models to analyze each of the relation, the results shows that IS only significantly affects the MP of companies in the aspect of market response, while the other aspects, MR and MV, yield insignificant results. -
The role of earnings management in the relationship between accruals and market value
Nasim Aryannejad ,
Mohammadhossein Ghaemi ,
Keyhan Maham
doi: http://dx.doi.org/10.21511/imfi.15(1).2018.20
Investment Management and Financial Innovations Volume 15, 2018 Issue #1 pp. 236-244 Views: 1460 Downloads: 190 TO CITE АНОТАЦІЯThe paper aims to clarify the role of earnings management in the relationship between accruals and the market value of companies. Previous studies suggest that some managers, for providing a desirable image of their performance, manage their profits through distorting cash or accruals. Consequently, investors rely on this information and estimate inaccurate stability of accruals which lead to mispricing phenomenon. Finally, the returns earned by the investors will not be equal to the expected return and thus the accrual anomaly will be created.
To this aim, two hypotheses were developed and three regression models were applied to analyze the data. To analyze and estimate the models employed, the financial information of 110 companies listed on the stock exchange between years 2008 to 2014 is used. A selective approach to test the hypotheses is studying cross-sectional data.
After conducting statistical tests, the results showed that discretionary accruals through which earnings management is done are improperly valued by the market, but the issue is not applicable regarding the non-discretionary accruals. Based on the close relationship between earnings management and discretionary accruals it can be found that earnings management can have an effect on the relationship between accruals and market value. -
Intellectual capital and market value: evidence from Jordan
Mohammad Fawzi Shubita
doi: http://dx.doi.org/10.21511/imfi.16(4).2019.04
Investment Management and Financial Innovations Volume 16, 2019 Issue #4 pp. 37-45 Views: 1420 Downloads: 197 TO CITE АНОТАЦІЯThis research aims to apply the value-added intellectual coefficient (VAIC) model to test the impact of intellectual capital (IC) on market value of the Jordanian industrial firms. The research increases the awareness of the need for firms of all sizes to communicate and value their business beyond capturing numbers alone. The sample for this study is 73 Jordanian manufacturing shareholders companies during the period 2005–2017. The sample employed consists of 648 firm-year observations. Market value is measured using the market capitalization over the total assets. Valuation approaches are a challenging area created to enable the stakeholders, or outside parties, to put an economic value on a firm.
The IC and its components: capital employed (CEE), structural capital (SCE), and human capital (HCE) of industrial firms have been analyzed, and their impact on market value has been estimated using regression models. The results show that there is no relationship between IC and the market value; HCE is associated with the market value, and SCE and CEE are not associated with the market value. This could be explained by the increase in employees’ training, as a regular training program is an essential factor in managers’ and employees’ performance. Practically, investors have a positive view of a firm that has higher employee expenditure than its investment in physical capital. Future research should be made on the empirical analysis of other sectors to determine whether different results and explanations can be obtained.
