Drivers of Firm's Value: Panel Data Evidence from Indian Manufacturing Industry

Asian Journal of Finance & Accounting, Vol. 7, No. 2, 2015

22 Pages Posted: 14 Dec 2015

See all articles by Ranjit Tiwari

Ranjit Tiwari

National Institute of Financial Management

Brajesh Kumar

Government of India - National Institute of Financial Management (NIFM)

Date Written: December 01, 2015

Abstract

The purpose of this paper is to classify the value drivers into broad categories and then identify the major drivers of firm’s value for Indian manufacturing industry and also work out the sectorial sensitivity of value drivers. To achieve the objectives of the study we first derive the value driver’s model next we use panel regression with different model specifications to empirically analyse the major drivers of firm’s value. Our study reveals that sales, net margin, book value, dividend per share, beta and earnings per share are the six major financial drivers of value. All the strategic drivers when included in the model have significant relation with value without disturbing the r-square of the model. Thus, it is clear that apart from generic financial drivers, firms need to put more attention on strategic choices they make, because it is the strategic choice that will give firms an edge over others in developing economies like India. Further, we also observe sector specific priorities of the value drivers. This paper provides academicians and practitioners with an overview of the applicability of value drivers for Indian manufacturing industry. Further, the study will fill the gap in literature by adding value drivers’ evidence from one of the fastest growing economies in the world and will benefit researchers in arriving at common consensus for value drivers in emerging economies.

Keywords: Drivers, Firm value, Manufacturing, Panel data analysis, India

Suggested Citation

Tiwari, Ranjit and Kumar, Brajesh, Drivers of Firm's Value: Panel Data Evidence from Indian Manufacturing Industry (December 01, 2015). Asian Journal of Finance & Accounting, Vol. 7, No. 2, 2015, Available at SSRN: https://ssrn.com/abstract=2702945

Ranjit Tiwari (Contact Author)

National Institute of Financial Management ( email )

Sector 48
Pali Road
Faridabad, Haryana 121001
India
+91-9560211378 (Phone)

Brajesh Kumar

Government of India - National Institute of Financial Management (NIFM) ( email )

Sector 48
Pali Road
Faridabad, Haryana 121001
India

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