TY - JOUR
T1 - Firms' Potential for Economic Sustainability and Firm Value
T2 - The Moderating Role of Blockholders
AU - Kyaw, Khine
AU - Thomsen, Steen
AU - Treepongkaruna, Sirimon
N1 - Epub ahead of print. Published online: 09 January 2022.
PY - 2022/1/9
Y1 - 2022/1/9
N2 - Firms that strive to innovate (i.e., firms that invest in research and development—R&D) have high potential for economic sustainability due to the possibility of generating new platforms of growth and future revenue. However, it is little understood whether financial markets incorporate (if at all) information on firms' potential for economic sustainability. After all, firms' information on R&D investments is very opaque. This poses a challenge to investors to incorporate into firm value any economic sustainability emanating from such information. We investigate whether blockholders, owners with at least a 5% shareholding in a firm, help reflect in firm value the firms' potential for economic sustainability. We find that active blockholders, rather than passive blockholders, help incorporate in firm value the potential for economic sustainability. Thus, active blockholders help mitigate agency problems in firms and help financial markets digest firms' potential for economic sustainability
AB - Firms that strive to innovate (i.e., firms that invest in research and development—R&D) have high potential for economic sustainability due to the possibility of generating new platforms of growth and future revenue. However, it is little understood whether financial markets incorporate (if at all) information on firms' potential for economic sustainability. After all, firms' information on R&D investments is very opaque. This poses a challenge to investors to incorporate into firm value any economic sustainability emanating from such information. We investigate whether blockholders, owners with at least a 5% shareholding in a firm, help reflect in firm value the firms' potential for economic sustainability. We find that active blockholders, rather than passive blockholders, help incorporate in firm value the potential for economic sustainability. Thus, active blockholders help mitigate agency problems in firms and help financial markets digest firms' potential for economic sustainability
KW - Active owners
KW - Blockholders
KW - Economic sustainability
KW - Firm value
KW - R&D
KW - Active owners
KW - Blockholders
KW - Economic sustainability
KW - Firm value
KW - R&D
U2 - 10.1002/sd.2287
DO - 10.1002/sd.2287
M3 - Journal article
JO - Sustainable Development
JF - Sustainable Development
SN - 0968-0802
ER -