Stock returns, industry concentration and firm expenditure decisions

Dzidziso Samuel Kamuriwo, Gulnur Muradoglu, Sheeja Sivaprasad and Issam Malki

Journal of Economics and Business, 2024, vol. 131, issue C, No S0148619524000377

Abstract: We build on agency and strategy literature to investigate and explain whether and how changes in stock returns are related to critical managerial expenditure decisions by firms that are consistent and supportive of the firm’s strategy in different industry concentrations. Unlike previous work, our study considers the impact of an extended list of managerial expenditure decisions in the different industry concentration settings. Our research employs a rich panel of firms listed on the UK London Stock Exchange. We find strong support for our postulations. Key managerial expenditure decisions we considered, leverage, inventories turnover, R&D intensity, SGA and fixed asset additions have a differential impact depending on the industry concentration. Our findings add to our understanding of the effect of managerial agency and its integration to strategy on firm stock returns. Managerial expenditure decisions are both constrained by the competitive context as well as strategic logic – both of which impact stock returns. Our study helps managers to prioritize consequential expenditure decisions in different competitive contexts – a key resource for not only weathering crisis periods but optimizing returns to shareholders.

Keywords: Industry Concentration; Leverage; Inventories; R&D; SGA; Fixed Asset Additions; Firm Value (search for similar items in EconPapers)
JEL-codes: G10 G3 G30 G32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148619524000377
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:131:y:2024:i:c:s0148619524000377

DOI: 10.1016/j.jeconbus.2024.106195

Access Statistics for this article

Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter

More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Catherine Liu ().