An analysis of the association between board composition and firm valuation in Finland
Sharma, Ajay (2019)
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Lataukset:
Sharma, Ajay
2019
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2019060615202
https://urn.fi/URN:NBN:fi:amk-2019060615202
Tiivistelmä
The purpose of this study was to analyze the association between firms’ valuation and
board composition. However, existing research explored the phenomenon of different
boards’ structure and its impact on company performance in non- Finnish settings. This has
created a need for a study that examines the association between firms’ valuation and
board composition. The main objective of the investigation was to analyze the relationship
between board size and firm valuation.
In order to reach the objectives, the previous literature was reviewed and the conceptual
framework identified whether the board size had either a positive or negative influence on
their respective firms’ performance. The firms’ valuation was considered on the basis of
their stock prices which were determined with discounted cash flow method. The sample
companies used in this study currently trading in Nasdaq Stock Exchange.
The study applied quantitative research methods. Financial data was collected for a period
of 5 years, 2014-2018. The key source of information was the companies’ financial
statements and the Nasdaq OMX Helsinki web page. The analysis of the data included the
Discounted Cash Flow model to estimate the fair value of a stock.
According to the findings, the majority of 20 listed firms were undervalued by the stock
market, and study showed the average size of a firm’s board was 20 members. The
limitations of the study were that the findings were based on the perspective of the small
sample set and also ignored other dimensions such as gender diversification, reputational
capital, and education.
board composition. However, existing research explored the phenomenon of different
boards’ structure and its impact on company performance in non- Finnish settings. This has
created a need for a study that examines the association between firms’ valuation and
board composition. The main objective of the investigation was to analyze the relationship
between board size and firm valuation.
In order to reach the objectives, the previous literature was reviewed and the conceptual
framework identified whether the board size had either a positive or negative influence on
their respective firms’ performance. The firms’ valuation was considered on the basis of
their stock prices which were determined with discounted cash flow method. The sample
companies used in this study currently trading in Nasdaq Stock Exchange.
The study applied quantitative research methods. Financial data was collected for a period
of 5 years, 2014-2018. The key source of information was the companies’ financial
statements and the Nasdaq OMX Helsinki web page. The analysis of the data included the
Discounted Cash Flow model to estimate the fair value of a stock.
According to the findings, the majority of 20 listed firms were undervalued by the stock
market, and study showed the average size of a firm’s board was 20 members. The
limitations of the study were that the findings were based on the perspective of the small
sample set and also ignored other dimensions such as gender diversification, reputational
capital, and education.