The Robust Impact of Macroeconomic Factors Towards Market Valuation Among Energy Sector Across Countries
Journal of Contemporary Issues in Business and Government,
2021, Volume 27, Issue 2, Pages 4267-4272
AbstractThis paper investigated the significant mean difference in market valuation by companies across countries. Further, it investigated the impact of macroeconomic factors proxies by Gross Domestic Product (GDP growth), Consumer Price Index (CPI), and Interest Rate (IR) towards the energy firms’ market valuation proxy by Tobins’ Q ratio. Secondary data were utilized for an unbalanced panel which consisted of eight countries. A total of 747 listed companies was the sample size that spanned through ten years (from 2010 to 2020). Data were gathered from Bloomberg. The study employed Scheffe method for comparison analysis and multivariate regression for impact analysis that was modelled into ordinary least square, random effect, fixed effect, and random effect robust. The best-fit model was chosen based on the results of the Bruesh Pagan Langragian Multiple (BP-LM) effect besides checking on heterokedasticity problem. The results obtained rectify that there is no multicolinearity issue and no heterokedasticity problem in data analysis. Therefore, the reported findings confirm that there are positive relationships and impact of GDP and CPI on Tobins’Q as well as a significant inverse relationship with interest rate factor across the countries.
- Abdul Rashid &Samia Khalid (2017). Impacts of Inflation and Interest Rate Uncertainty on Performance and Solvency of Conventional and Islamic Banks in Pakistan. Journal of Islamic Business and Management 2017, 7(2), 156-177. https://doi.org/10.26501/jibm/2017.0702-002
- Basu, Parantap; Gillman, Max; Pearlman, Joseph (2009): Inflation, human capital and Tobin's q, Cardiff Economics Working Papers, No. E2009/16, Cardiff University, Cardiff Business School, Cardiff. https://www.econstor.eu/bitstream/10419/65759/1/609933353.pdf
- Broadstock, D.C., Shu, Y. and Xu, B. (2011), “The heterogeneous impact of macroeconomic conditions on firms’ earnings forecast”, Proceedings of Macao International Symposium on Accounting and Finance, Macao.
- Chinedu Francis Egbunike (2018). Macroeconomic factors, firm characteristics and financial performance. A study of selected quoted manufacturing firms in Nigeria. Asian Journal of Accounting Research. Vol. 3 No. 2, 2018, pp. 142-168.
- Hsieh W-J (2013). The Stock Market and Macroeconomic Variables in New Zealand and Policy Implications Journal of International and Global Economic Studies, 6(2), December 2013, 1-12
- H. Isnurhadi, H. Taufik&DeddyHerwanto (2018). The Effect of Macroeconomic Fundamental Factors On Corporate Value Through Financial Performance As Intervening Variables In Manufacturing Companiesn In Indonesia Stock Exchange. Downloads/176-Article%20Text-315-1-10-20190813.pdf
- Xiaoji Lin, Chong Wang, Neng Wang, Jinqiang Yang (2018). Investment, Tobin’s q, and interest rates. Journal of Financial Economics. 130(3), 620-640. https://doi.org/10.1016/j.jfineco.2017.05.013.
- James H . Chan-Lee (u.d). Pure Profits And Tobin's Q In Nine Oecd Countries. http://www.oecd.org/economy/outlook/35571602.pdf
- Yu Hsing (2011). Effects of Macroeconomic Variables on the Stock Market: The Case of the Czech Republic. Theoretical and Applied Economics, Volume XVIII (2011), No. 7(560), pp. 53-64..
- Naoto Jinji, Xingyuan Zhang, Shoji Haruna (2019). Does a firm with higher Tobin’s q prefer foreign direct investment to foreign outsourcing?. The North American Journal of Economics and Finance, Volume 50, https://doi.org/10.1016/j.najef.2019.101044.
- Misbah Sadiq, Sheikh Usman Yousaf, Muhammad Khalid Anser, Haroon ur Rashid Khan, SriyantoSriyanto, Khalid Zaman, Duong Van Tu, Siti Nisrin Mohd Anis (2020).The role of debt financing in the relationship between capital structure, firm’s value, and macroeconomic factors: To throw caution to the wind. The Quarterly Review of Economics and Finance, 2020. https://doi.org/10.1016/j.qref.2020.11.001.
- Bo Yang, Liu Gan (2021). Contingent capital, Tobin’s q and corporate capital structure, The North American Journal of Economics and Finance, Volume 55, 2021. https://doi.org/10.1016/j.najef.2020.101305. (https://www.sciencedirect.com/science/article/pii/S1062940820301935)
- Mari Tanaka, Nicholas Bloom, Joel M. David, Maiko Koga (2020). Firm performance and macro forecast accuracy. Journal of Monetary Economics 114 (2020) 26–41.
- Tobin, J. , 1982. On the efficiency of the financial system. Lloyds Bank Rev. 153, 1–15 .
- World Bank Group (2015), “Kenya economic update”, available at: www-wds.worldbank.org/external/ default/WDSContentServer/WDSP/IB/2015/10/14/090224b08314473e/1_0/Rendered/PDF/ Kenya0economic0public0participation.pdf (accessed 15, June 2015).
- Antonio Carlos AidarSauaia& Francisco Henrique Figueiredo Castro Junior (2002). Is The Tobin’s Q A Good Indicator Of A Company's Performance?. Developments in Business Simulation and Experiential Learning, Volume 29, 2002
- Barkat Ullah (2020). Macro Level Determinants of Firm Performance: A Sector Wise Approach with Evidence from Pakistan. https://thesis.cust.edu.pk/UploadedFiles/Barkat%20Ullah%20(MBAG%20183011).pdf
- Article View: 121
- PDF Download: 129