Determinants of Value Creation: An Empirical Examination from UAE Market
The study based on a sample of 61 UAE listed companies examines the determinants of value creation. Size in terms of total assets of a firm is inversely related to value creation. Value as measured by market to book value of equity is negatively related to the size measured by total assets. Larger...
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| Format: | Article |
| Language: | English |
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EconJournals
2014-12-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://econjournals.com/index.php/ijefi/article/view/993 |
| _version_ | 1797918217259188224 |
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| author | B. RAJESH KUMAR |
| author_facet | B. RAJESH KUMAR |
| author_sort | B. RAJESH KUMAR |
| collection | DOAJ |
| description |
The study based on a sample of 61 UAE listed companies examines the determinants of value creation. Size in terms of total assets of a firm is inversely related to value creation. Value as measured by market to book value of equity is negatively related to the size measured by total assets. Larger the size in terms market capitalization, higher would be the value created. Higher earnings relative to price signify higher value creation. Firms having higher risk are expected to have higher returns. The study finds statistical support for the fact that increasing leverage increases the risk of equity shareholders. Hence leverage increases leads to increased expected returns to account for increased risk for equity shareholders. The study also suggests that the average market returns is inversely related to earnings to price ratio. Lower average stock returns are predicted for firms with low market value of equity relative to their earnings. Riskier firms tend to have lower earnings relative to their market value of equity.
Keywords: Value Creation; Market Value; Book Value; ROI; Capital Expenditures
JEL Classifications: G2; G3
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| first_indexed | 2024-04-10T13:25:46Z |
| format | Article |
| id | doaj.art-70c2b21c9e164779a91fb2da7026bf92 |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T13:25:46Z |
| publishDate | 2014-12-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-70c2b21c9e164779a91fb2da7026bf922023-02-15T16:11:52ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382014-12-0151Determinants of Value Creation: An Empirical Examination from UAE MarketB. RAJESH KUMAR0INSTITUTE OF MANAGEMENT TECHNOLOGY DUBAI The study based on a sample of 61 UAE listed companies examines the determinants of value creation. Size in terms of total assets of a firm is inversely related to value creation. Value as measured by market to book value of equity is negatively related to the size measured by total assets. Larger the size in terms market capitalization, higher would be the value created. Higher earnings relative to price signify higher value creation. Firms having higher risk are expected to have higher returns. The study finds statistical support for the fact that increasing leverage increases the risk of equity shareholders. Hence leverage increases leads to increased expected returns to account for increased risk for equity shareholders. The study also suggests that the average market returns is inversely related to earnings to price ratio. Lower average stock returns are predicted for firms with low market value of equity relative to their earnings. Riskier firms tend to have lower earnings relative to their market value of equity. Keywords: Value Creation; Market Value; Book Value; ROI; Capital Expenditures JEL Classifications: G2; G3 https://econjournals.com/index.php/ijefi/article/view/993 |
| spellingShingle | B. RAJESH KUMAR Determinants of Value Creation: An Empirical Examination from UAE Market International Journal of Economics and Financial Issues |
| title | Determinants of Value Creation: An Empirical Examination from UAE Market |
| title_full | Determinants of Value Creation: An Empirical Examination from UAE Market |
| title_fullStr | Determinants of Value Creation: An Empirical Examination from UAE Market |
| title_full_unstemmed | Determinants of Value Creation: An Empirical Examination from UAE Market |
| title_short | Determinants of Value Creation: An Empirical Examination from UAE Market |
| title_sort | determinants of value creation an empirical examination from uae market |
| url | https://econjournals.com/index.php/ijefi/article/view/993 |
| work_keys_str_mv | AT brajeshkumar determinantsofvaluecreationanempiricalexaminationfromuaemarket |