Firm Valuation in an Emerging Economy: A Decade of Evidence from the Tunisian Stock Exchange

Abstract

Firm value is a critical indicator of long-term corporate success, reflecting both current performance and investor confidence in future growth. However, unique corporate governance dynamics and economic fluctuations in emerging markets pose distinct challenges to value maximization. While extensive literature examines firm valuation in developed economies, comprehensive empirical evidence on the interaction among financial, governance, and macroeconomic determinants in the Tunisian market remains limited. This study aims to identify the key determinants of firm value for companies listed on the Tunisian Stock Exchange. Utilizing a static panel data approach with random effects, this research analyzes a sample of 30 listed firms over a (10) ten-year period from 2015 to 2024. The findings reveal that return on assets (ROA), return on equity (ROE), firm size, board independence, and economic growth significantly and positively influence firm value, as measured by Tobin's Q. Conversely, financial leverage and asset liquidity significantly and negatively affect market valuation. The study concludes that robust corporate governance and strong financial performance are essential for enhancing firm value in Tunisia. For corporate managers and policymakers, these findings underscore the necessity of promoting board independence and optimizing capital structures to avoid excessive debt, ultimately attracting investment and fostering sustainable economic growth.