The Effect of Value-Based Management on the Market Performance of Companies Listed on the Tehran Stock Exchange

Subject Areas : Management Accounting

nemat rostami mazouei ¹ , zahra shircavand ²

1 - Assistant Professor of Accounting , chalous Branch, Islamic Azad University, chalous, Iran.( Corresponding author)
2 - Ph.D Student of Accounting , chalous Branch, Islamic Azad University, Iran

Received: 2022-04-23 Accepted : 2022-04-23 Published : 2022-02-20

Keywords: Value-based management, Market value, abnormal return,

Abstract :

Purpose: During the last few decades, various studies have investigated the performance implications of value-based management. While many studies indicate that firms that implement a value-based metric within their control and reporting systems can outperform their peers who opt against implementing such a metric. In this regard, the present study examines the impact of value-based management on the market performance of companies listed on the Tehran Stock Exchange to assess the accuracy of this claim in the Iranian stock market as a developing country.Method: In order to measure the company's market performance, two criteria of stock market value and abnormal cumulative stock returns in the period of 1 day before and after the publication of financial statements were used. Also, in order to measure value-based management, the difference between the rate of return on investment and the rate of cost of capital was used to include the main feature of value-based management in measuring it. The research method was descriptive-correlational and the statistical population of the study included all companies listed on the Tehran Stock Exchange during the period 2014 to 2020 that 154 companies were analyzed as the final sample. Research data were extracted using Rahavard Novin software and through the annual financial statements of companies and were analyzed using panel data regression.Findings:The results of fitting the research models showed that value-based management had a direct and significant effect on the value of the company's stock market, while its effect on the company's accumulated abnormal returns was obtained in the opposite and significant direction.Conclusion: According to these results, it seems that value-based management in the view of shareholders has been less important than other factors and financial characteristics of the company.

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