The Effects of Cost Efficiency and Investment Efficiency on Value Chain Performance and Cash Flow Growth

Document Type : Original Article

Authors

• Behrooz Badpa
• Mohammad Amin Jamshidi

Department of Accounting, Faculty of Humanities, Ilam University, Ilam, Iran

10.22067/ijaaf.2025.46482.1513

Abstract

Value creation is among the top strategic goals of companies as it plays a leading role in their sustainability and success in a competitive market and often leads to their cash flow growth. One of the requirements for value creation is the efficient and effective utilization of company’s resources. In view of that, controlling costs and managing financial resources effectively as well as investing in value-creating projects can be the keys to company’s success in boosting value chain performance and cash flows. The present study was to investigate the effects of cost efficiency and investment efficiency on value chain performance and cash flow growth in companies. The statistical population consisted of the companies listed on the Tehran Stock Exchange, Iran, during 2017-2022, of which 115 samples were selected using purposive sampling. Multivariate regression was then practiced to analyze the data. The study results at the 95% confidence level demonstrated that cost efficiency and investment efficiency have significant positive effects on value chain performance. Moreover, cost efficiency and investment efficiency increase company’s cash flows. In other words, controlling and managing costs and avoiding over- or underinvestment improve overall performance in companies throughout value chain steps and lead to their cash flow growth. With respect to the study results, policymakers can effectively contribute to improving company’s performance and value creation by developing regulations, providing financial support, and establishing other incentives for the ones implementing cost efficiency as a strategic thinking.

Keywords

• Cost Efficiency
• Investment Efficiency
• Value Chain Performance
• Cash Flow Growth
• Stochastic Frontier Function

Main Subjects

• Accounting

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