Prototyping and design of a reconfigurable run-flat tire: an innovative approach

Аннотация

This study examines the relationship between VOLUME Vol.05 Issue04 2025 institutional ownership, firm size, and firm value, with tax avoidance serving as a moderating variable. CITATION Institutional ownership and firm size are often viewed as critical factors that can influence a firm’s financial performance and its market valuation. Tax avoidance, a COPYRIGHT © 2025 Original content from this work may be used under the terms strategy employed by firms to reduce their tax liabilities, of the creative commons attributes 4.0 License. may alter the effect of these factors on firm value. Using data from publicly traded firms over a five-year period (2017–2022), the study employs regression analysis to test the moderating role of tax avoidance. The results indicate that both institutional ownership and firm size positively impact firm value. Moreover, tax avoidance significantly moderates these relationships, enhancing the positive effect of institutional ownership on firm value and diminishing the negative effect of firm size on firm value. These findings offer implications for investors, policymakers, and corporate managers seeking to understand the dynamics between ownership structures, firm size, and corporate strategies like tax avoidance. Keywords: Institutional ownership, firm size, firm value, tax avoidance, moderating effect, corporate governance, financial performance. Introduction: The relationship between a firm’s ownership structure, its size, and its market value has long been a subject of interest for scholars and investors alike. Institutional ownership, which refers to the percentage of a firm's shares held by institutional investors, is often seen as an indicator of a firm’s credibility and governance standards. Meanwhile, firm size, measured by total assets or market capitalization, has been found to be linked to the firm’s ability to generate revenue, access capital, and withstand market pressures. Together, these factors can have a profound Journal of Management and Economics 01 https://eipublication.com/index.php/jme Journal of Management and Economics impact on a firm's overall value in the market. How does tax avoidance moderate the relationship between institutional ownership, firm size, and firm Institutional Ownership and Firm Value value? Institutional investors are generally viewed as more METHODS informed and sophisticated investors. Their involvement can bring enhanced corporate Data Collection governance, strategic guidance, and improved This study uses secondary data from publicly traded performance through active monitoring and firms in the United States over the period from 2017 to engagement (McConnell & Servaes, 1990). However, 2022. The sample includes companies from various the effect of institutional ownership on firm value can industries, with the data obtained from financial vary depending on factors such as investor activism, statements and company reports available through firm performance, and the nature of the institutional databases such as Bloomberg and Compustat. The final investor. sample consists of 500 firms that were consistently Firm Size and Firm Value listed during the study period. Firm size is often associated with economic advantages Variable Measurement such as economies of scale, market power, and better Institutional Ownership (IO): The percentage of shares access to resources. Larger firms tend to have more held by institutional investors. This information was diversified operations and are perceived to be less collected from the firm's annual reports and investor risky, which can contribute to higher firm valuation. disclosures. However, some studies suggest that larger firms might Firm Size (FS): Measured by the firm’s total assets at the experience managerial inefficiencies or reduced end of the fiscal year. Firm size is often used as a proxy flexibility, potentially diminishing their market value for the firm’s market power and ability to access capital. (Jensen & Meckling, 1976). Firm Value (FV): Firm value is represented by the firm’s Tax Avoidance as a Moderating Variable market capitalization (stock price multiplied by shares Tax avoidance refers to the strategic use of legal outstanding). This provides an overall estimate of how methods to minimize a firm’s tax obligations. While tax the market values a firm. avoidance can improve short-term profitability and Tax Avoidance (TA): Tax avoidance is measured using firm value by increasing available capital for the effective tax rate (ETR), calculated as the ratio of reinvestment, its long-term impact on firm value can income tax expense to pre-tax income. A lower effective be more complex. Some studies suggest that tax rate indicates higher tax avoidance. aggressive tax avoidance can attract regulatory scrutiny or damage a firm’s reputation, potentially Model Specification decreasing its market value (Wilson, 2009). However, The study uses multiple regression analysis to test the in certain con