Økonomisk værdiskabelse: Et komparativt studie af private og børsnoterede selskaber

Arunthujan Gunasekaran & Mathias Emil Nielsen

Student thesis: Master thesis


The main objective of this thesis is to investigate the relationship between ownership structure and firm performance. Public companies have considered to be strategically shortsighted, affected by investors demand for short term profit. This effect is called short-termism and has been the motivation for this thesis’ study of firm performance. This relation has been under extensive review in both recent and past studies. However, most of these studies fail to consider the return after cost of capital when considering firm performance. This study conducts an empirical analysis between public and privately held companies (PHCs) and considers firm performance based on economic profit for both investors and owners. The economic profit is measured through both Economic Value Added (EVA) and Residual Income (RI).
The methodology of this thesis is primarily quantitative and examines the financial performance of 36 companies through a 13-year period, going from 2006-2018. The sample of companies consists of two separate groups of nine PHCs and 27 public companies. The companies are matched by size and industry. To obtain the key figures EVA and RI, a profitability analysis based on all firms’ financial reports is conducted as well as calculating the weighted average cost of capital for each firm.
Based on previous studies, this thesis examines the relation between public and private companies under the hypothesis, that PHCs are expected to perform more efficient than public companies. The thesis finds that PHCs create significantly more value based on an EVA approach. These results are caused by significantly higher levels of profit margins and asset turnover rates for PHCs, resulting in a higher Return on Invested Capital (ROIC). PHCs mange to outperform public companies, even though the study finds the cost of capital to be greater for PHCs.
On the contrary, the RI proves not to be significantly different between the two samples. These results are driven by the findings of Return on Equity (ROE) and cost of equity. The analysis finds that ROE is higher for PHCs, but not significant. A further analysis shows higher financial expenses of PHCs to have a possible effect on this outcome. Based on a sensitivity analysis the thesis finds a significantly higher ROE, but no significant higher return on the Residual Income of PHCs.
In conclusion, the thesis finds that PHCs create significantly more value based on an EVA-approach, compared to public companies. However, there are no evidence of a significantly different RI between PHC’s and public companies. These findings are partly consistent with former comparable studies.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2020
Number of pages186
SupervisorsSteen Thomsen