Examining the Effects of Innovation, Market Competition, and Financial Choice on Firm Value

Amanj Mohamed Ahmed (), Zoltán Bujdosó and István Hágen
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Amanj Mohamed Ahmed: Hungarian University of Agriculture and Life Sciences
Zoltán Bujdosó: Hungarian University of Agriculture and Life Sciences
István Hágen: Hungarian University of Agriculture and Life Sciences

A chapter in New Challenges of the Global Economy for Business Management, 2025, pp 21-38 from Springer

Abstract: Abstract The objective of this research is to enhance understanding of company value through an empirical investigation of the interrelated impacts of financial decisions, market competition, and innovation strategy. The financial data used in this study originates from the 148 non-financial firms’ annual financial statements that were listed on the Tehran Stock Market (TSM). This extensive dataset makes it feasible to investigate how the above factors affect the value of the company. The Generalized Method of Moments (GMM), a panel econometric technique, was applied to assess the given specification. The complex interactions between competitiveness, research and development, financial structure, and business value are clarified by this study. The influence of research and development investment on firm value is still unclear, even though strong market competition measured by (Herfindahl–Hirschman Index) tends to diminish the firm value. It is also interesting to note that financial structure has a distinct effect. High reliance on excessive amounts of debt may hamper firm performance to be improved by raising risk and reducing chances for investments. However, optimum capital structure (mixture of debt and equity) reduces a company’s cost of capital while increasing its value. This balance guarantees that an organization may effectively finance its operations and expansion endeavors while avoiding undue financial risk.

Keywords: Competition; Innovation; Financing; Firm value (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-981-96-4116-1_2

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DOI: 10.1007/978-981-96-4116-1_2

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