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STEWARDSHIP THEORY

Donaldson and Davis established the stewardship theory in 1989 and offered it as a normative substitute for the agency theory. Stewardship theory offers a non-economic foundation for describing the connection, unlike agency theory, which prioritises control and conflict (Sundaramuthy and Lewis 2003). According to the stewardship hypothesis, managers will take good care of the resources they are in charge of. It also asserts a direct link between employee happiness and an organization's ability to succeed. "Stewardship is the prudent practice of Allocation, management, and supervision of capital to produce long-term value for customers and beneficiaries, resulting in long-term gains for the economy, the environment, and society. Therefore, it is clear that stewardship must be seen from a long-term perspective in order to produce sustainable advantages for the stakeholders. According to the stewardship hypothesis, ownership just holds a firm trust rather than really owning it. A...
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Green Washing

You've probably heard of whitewashing at least once in the corporate world. Whitewashing is when an organization hides or conceals scandalous information by presenting a biased account of the facts. However, greenwashing is less well-known. Many stakeholders are more conscious of environmental considerations due to rising environmental problems and, subsequently, rising general knowledge. Stakeholders like investors, buyers, governments, and corporate clients have increased their pressure on businesses over the past ten years to share information about their environmental performance and to produce environmentally responsible goods. Environmentalist Jay Westerveld coined "greenwashing" in a critical essay in 1986. This was inspired by the irony of the "save towels" movement in hotels, which had little impact other than saving on hotel laundry costs. The idea arose at a time when most consumers got their news primarily from television, radio and print media. ...
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BUSINESS VALUATION

We can classify the financial market analysis into fundamental and technical analyses. But this study solely focuses on the fundamental analysis only.  Fundamental analysis Fundamental analysis is a technique for assessing securities that aim to calculate a stock's intrinsic worth. The primary tenet of fundamental analysis is that a company's actual worth may be linked to its financial features, including its cash flows, risk profile, and growth potential. A stock is under or overpriced if there is any departure from this genuine value. The main goal of fundamental analysis is valuation. While some analysts utilize multiples like the price-earnings and price-book value ratios to assess businesses, others employ discounted cash flow models. On average, investors that use this strategy anticipate that their portfolios will outperform the market because they own many inexpensive companies. Efficient market hypothesis When the market price accurately reflects the investment's a...
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Resource Based Theory (RBT)

  RBT, or resource-based theory, is a well-known method for strategic management. In order for a company to maintain a competitive edge, it has been frequently used as a managerial framework to identify essential resources. The theory offers a crucial framework for deriving explanations for and projections of the basic drivers of a firm's performance and competitive advantage. Penrose (2009) introduced Resource-Based Theory (RBT) for the first time by putting up a model for the efficient management of organisations' resources, diversification tactics, and business possibilities. The idea of seeing a corporation as a coordinated collection of resources to address and tackle how it might achieve its goals and strategic behaviour was first put out in Penrose's book. RBT offers a framework to identify and foresee the core elements of business performance and competitive advantage. In response to prior managerial interest in the industry structure, a more macro viewpoint, RBT tu...
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Trade off theory

 According to the trade-off theory of capital structure, business leverage is calculated by weighing the advantages of debt in terms of tax savings against the costs of bankruptcy. The theory was created at the beginning of the 1970s, and despite a number of significant obstacles, it is still the most widely accepted explanation of corporate capital structure.  According to the argument, if the tax system permits more generous interest rate tax deductions, corporate debt will rise in the risk-free interest rate. The amount of debt is dropping throughout a bankruptcy's deadweight losses. The tax advantages are reducing as the risk-free interest rate is rising, which affects the equilibrium price of debt. According to Friedman (1970), trade-off theory asserts that a company must utilise its assets and skills to best serve its shareholders and increase their profits (Gillan et al., 2021). Therefore, it contends that ESG-related investments come with extra expenses that might redu...
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Stranded Assets

  It would be necessary to retain a significant amount of the world's current fossil fuel reserves underground in order to reduce the rise in global temperature to well below 2°C. In order to keep global warming to 1.5°C, the Paris Agreement target, an estimated 60% of oil and gas reserves and 90% of known coal stocks need stay untapped, according to a 2022 research published in the journal Nature. These "stranded assets"—fossil fuel resources that cannot be burnt and fossil fuel infrastructure, such as pipelines and power plants—that is no longer in use and may become a liability before the end of its expected economic lifetime—would be left behind in this scenario. The shift to a low-carbon economy might have an impact on companies that extract coal, gas, and oil, but other industries are also at danger. Other industries, like the aviation industry, that rely on fossil fuels as manufacturing inputs or are otherwise energy- or carbon-intensive, may also be affected. All ...
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Informedness and the Consensus effects

The information in public announcements, such as the informedness and the consensus effects, may influence how the market responds to further information. When investors have more knowledge about business value at the time of an information release, the informedness impact takes place. As investors become more informed and take action to update their portfolios, this phenomenon typically results in an increase in share turnover and price volatility, but a decrease in the bid-ask gap since the realised price is likely to be further from the projected price. The consensus impact gauges the level of investor agreement at the time of an information release. Due to investors' tendency to perceive information uniformly and the fact that less ambiguity is addressed through the market aggregation process, it often results in a decrease in bid-ask spread and volume and an increase in price volatility.
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