Market Concentration and Firm Value

Abstract

In this study, we examined the relationship between market concentration using the Herfindahl-Hirschman index and firm values among listed companies in both the markets for the period 2011–2020. We found a negative association between market concentration and firm value. This relationship was mitigated by such factors as dividend payments, auditor size, and financial reporting opacity. This study contributes to the existing literature by corroborating the influences on firm value and addressing the prevailing research paradigm suggesting that market competition is a mechanism for overseeing managerial behavior (i.e., an external corporate governance structure).