Firm value determinants: panel evidence from European listed companies


  • Bojana Vuković University of Novi Sad, Faculty of Economics in Subotica, Subotica, Serbia
  • Teodora Tica University of Novi Sad, Faculty of Economics in Subotica, Subotica, Serbia
  • Dejan Jakšić University of Novi Sad, Faculty of Economics in Subotica, Subotica, Serbia



Firm value, European companies, Tobin Q, Panel analysis


Background: To manage growth opportunities effectively and to make a significant impact on superior long-term performance, it is necessary to analyze firm value and diagnose its determinants. Increasing profit, providing prosperity to the company's stakeholders, and improving company value are the goals of every company’s business.

Purpose: The paper aims to build a model of the company's optimal value by assessing company performance based on financial statement analysis of European companies over the period 2015-2020.

Study design/methodology/approach: The impact of financial indicators such as financial leverage, profitability, size, liquidity, growth, and asset tangibility on company value was thoroughly considered. The empirical research was founded on a sample of 158 Eastern and Western European companies, generating 948 observations. Panel regression analysis was conducted.

Findings/conclusions: The obtained results revealed that debt-to-assets ratio, return on equity, and assets tangibility have a significant adverse effect on company value, whereas the return on assets and firm size have a significant favorable effect. The obtained conclusions should serve as a beneficial tool for the strategy of reaching the targeted market company’s value and ensuring the company's future viability by the market. Hence, stakeholders could assess the perspective of the future company's development and strengthen the importance and influence of financial variables on the company's value.

Limitations/future research: The research limitations, which are also opportunities for future research, are aimed at the investigation of company value indicators at the level of individual European economies or industries. One should look at the company's value factors before and after the Covid-19 pandemic and consider a longer time in the company’s business. Other financial determinants that affect the value of the company could be considered, and the company value could be measured by some other indicators. Also, the influence of non-financial determinants on the company value could be researched.