Corporate Financial Performance Research Articles

Forecasting corporate financial performance with deep learning and interpretable ALE method: Evidence from China

Forecasting corporate financial performance with deep learning and interpretable ALE method: Evidence from China

Internal Management Strategy of Chinese Internet Enterprises and Business Performance: A Study of Tencent Internet Enterprises in China

The objective of this research is to examine the relationship between the internal management strategy of Chinese internet enterprises and business performance. The research results in the fields of business models and innovations, internet business models and their innovation theories and practices, and business ethics are analyzed and discussed, while the internet development process of China is reviewed. Then, the existing problems are analyzed, and the concerned field and concepts in this study are clarified. Based on previous theoretical research and market research, the research methodology is designed, the research hypotheses are proposed, and the research models are constructed to perform quantitative and qualitative research. Next, the cases of Baidu, Alibaba and Tencent are engaged to conduct empirical analysis and verify the conclusions. The correlation analysis show that the impact on corporate financial performance is positive when social responsibility to shareholders, creditors, users, and government is undertaken, which is consistent with the original hypothesis. However, fulfilling social responsibility to employees and suppliers is significantly and negatively related to financial performance, which is inconsistent with the original hypothesis. Therefore, companies should take a long-term perspective and not just see short-term benefits at the expense of long-term social benefits. Companies pay attention to and carry out a series of social responsibility activities can establish stable emotional ties with the public, so that the company can gain the support and trust of many parties in society, and can enhance market competitiveness and bring good development opportunities, thus improving the viability of the company and increasing social and economic value for the company

Research on ESG performance and financial performance of new energy enterprises

ESG is more about measuring corporate environment, social responsibility, and corporate governance than traditional financial data considerations. For the long-term development of globalization and dual-carbon strategy, based on sustainable development and the realization of global development, many enterprises will consider ESG performance in corporate financial performance evaluation. In the era of advocating green life, new energy enterprises have received much attention, but their industry financial performance is closely related to ESG performance. This paper takes all of China's A-share-listed new energy companies from 2010 to 2021 as the research object and verifies the relationship between ESG performance and financial performance of new energy enterprises through empirical analysis, which is of great significance for better high-quality development of new energy enterprises.

Corporate Social Responsibility: Impact on Firm Performance for an Emerging Economy

Corporate Social Responsibility (CSR) was usually referred to as a concept where companies initiate voluntary action towards social and environmental concerns in the context of business operations related to the stakeholders of the company prior to the CSR Act 2013 in India. Post-2013, the voluntary initiative was replaced by regulatory guidelines to address social and environmental concerns. The CSR applicability–investment gap was used as a base concept in this study with instrumental theory; the study offers a strategic perspective of CSR and how organizations emphasized maximizing stakeholders’ value. In order to further investigate the effect of CSR on corporate financial performance (CFP) through the measure of shareholders’ value, i.e., the return on equity (ROE), the study used the sample from the National Stock Exchange (NSE)-Nifty-100 indexed companies of Emerging Economy—India for a span of fourteen years (2009–2023). The vast majority of research in this domain is conducted in developed countries; the research gap is filled by this study by considering India and drawing samples from multiple industries. The empirical model was developed by using panel data regression, where the dependent variable was ROE, and the independent variables were earning per share (EPS), log total income (LTI), CSR applicability/profit after tax (CRSAPPPAT), and CSR investment/profit after tax (CSRIPAT). The findings also highlighted the CSR applicability and investment of the firms during pre- and post-Sustainable Development Goal (SDG) periods. The same was also analyzed for the firms committed to CSR and not committed to CSR. The results indicated that there is no significant impact of the CSR/ESG initiatives (applicability and investment) on the ROE of the firms. The performance could be better if the companies minimize the CSR/ESG promise–performance gap through effective communication with stakeholders.

The Effect of Environmental, Social, and Governance (ESG) Performance on Corporate Financial Performance in China: Based on the Perspective of Innovation and Financial Constraints

This paper analyzes the effects of Environmental, Social, and Governance (ESG) performance on corporate financial performance (CFP), enriching the research on the intrinsic mechanism between ESG and financial performance in developing countries. This study uses a data sample of A-share listed companies in Shanghai and Shenzhen, China from 2009 to 2021, and adopts a two-way fixed effects model research methodology with fixed time and industries to explore the relationship and intrinsic mechanism between the two in conjunction with relevant basic theories. The study findings indicate that ESG performance exerts a positive influence on CFP by fostering corporate innovation. Corporations with good ESG performance in the long term may be more conducive to good CFP. When corporations face financial constraints, the role of ESG performance in enhancing CFP weakens. Heterogeneity analyses indicate that ESG performance contributes more to the CFP of non-state-owned enterprises (non-SOEs). The negative moderating influence of financial constraints is more pronounced in non-SOEs. Additionally, ESG performance promotes the improvement of CFP in non-heavy polluting corporates. This research study extends a scientific foundation for how corporates can improve CFP and increase market competitiveness.

Green pays off: the impact of corporate carbon strategies on corporate financial performance

Green pays off: the impact of corporate carbon strategies on corporate financial performance

The effect of city reputation on Chinese corporate risk-taking

City reputation is a valuable asset for the local economy and firms in the contemporary society. However, the impact of city reputation on micro-level firms has been largely overlooked by the literature. This paper uses the National Civilized City (NCC) policy in China as a quasi-natural experiment to enhance city reputation. We employ the DID approach to investigate the relationship between city reputation and corporate risk-taking. The result shows that corporate risk-taking significantly increases following the NCC policy adoption. Moreover, information asymmetry can strengthen the positive impact of city reputation on corporate risk-taking. Channel tests show that city reputation improves financial condition and decreases default risk, leading to improved risk-taking tolerance. Overall, our paper indicates that city reputation is an important mechanism to improve corporate financial performance, providing empirical evidence for local governments to pursue the NCC title.

How does excess cash affect corporate financial performance?

PurposeThis article analyzes the moderating role of investment opportunities, business risk and agency costs in shaping the nexus between excess cash and corporate performance.Design/methodology/approachThis research uses dynamic regression models (two-step system generalized method of moments) to analyze the data related to 200 Turkish companies listed on Borsa Istanbul (BIST) for the years between 2009 and 2020.FindingsThe findings indicate that when excess cash increases, the financial performance deteriorates only for firms with lower investments compared to firms with more investments. In addition, investment contributes to better financial performance for firms that hold cash surplus, whereas the influence of investment is insignificant for firms that have insufficient cash. Agency costs of equity exacerbate the adverse impact of excess cash on financial performance while agency costs of debt mitigate this effect. Excess cash reduces the financial performance of highly leveraged firms. However, this impact becomes insignificant when debt ratio decreases. The findings also show that investment has more significant role than business risk in building the precautionary motive to hold cash.Research limitations/implicationsThe findings of this article are limited to the Turkish market. Future research is still needed in other emerging markets to compare the results and reveal more about the effect of excess cash on firm performance, and how other factors can change this effect.Practical implicationsThe findings verify the increased significance of excess cash in the presence of investment opportunities and difficulties in accessing external funds. Nevertheless, the role of the equity related agency problem in reducing the benefits of cash surplus confirms the necessity of policies that support corporate governance, especially in emerging markets.Originality/valueThis article, according to the knowledge of author, is the first to examine the role of agency costs associated with debt and equity, and the compound effect of investment opportunities and business risk on the nexus between excess internal funds and corporate financial performance in emerging markets.

An Empirical Study of the Relationship Between Digital Transformation, Corporate Social Responsibility and Financial Performance

The article investigates the impact of corporate social responsibility (CSR) and digital transformation (DT) on corporate financial performance (CFP) indicators, as well as the moderating effect of DT on the relationship between CSR and CFP indicators. The study was conducted using Stata 17.0 software based on data (5709 observations) on 558 A-share listed manufacturing companies of the Shanghai and Shenzhen Stock for 2012-2021 (excluding financial and insurance companies, ST and ST* companies, as well as companies with incomplete data). The independent variable used in the modelling process is the CSR rating report of the Hexun website, indicators of which are reconstructed by dividing them into strategic CSR (shareholder responsibility, employee responsibility, customer responsibility) and altruistic CSR (environmental responsibility and social contribution). The dependent variable is 2 CFP indicators: return on equity (ROE) and TOBIN’s Q. The DT index is used as a moderating variable, for the calculation of which the texts of companies’ annual reports were segmented using the Python programming language and standardised data on the frequency of keywords in 4 dimensions: digital technology application, Internet business model, intelligent manufacturing and contemporary information system; the weights for each dimension index was determined using the entropy approach. The control variables are corporate assets (Size), financial leverage level (Lev), current ratio (Cur), firm growth (Gro), shareholding ratio of the largest shareholder (First) and technological innovation (RD) of companies. The study also considered the year and industry factors. To study the moderating effect of DT on the relationship between CSR and CFP indicators of companies in different situations, the grouping variables chosen were the ownership type (state-owned and non-state-owned companies), the enterprise lifecycle (cash flow portfolio method was used to identify its stages) and the degree of market competition (Herfindahl-Hirschman Index). The modelling is based on a fixed-effects regression model. The study found that both CSR and DT have a positive impact on CFP, and that DT moderates the relationship between CSR and CFP, indicating that integrating digital technologies with sustainable development strategies can enhance financial benefits. The study also highlights the importance of different dimensions of corporate social responsibility. A high level of digital transformation strengthens the promotion effect of strategic social responsibility on current and future financial success of companies. Meanwhile, the promotion effect of altruistic social responsibility on current financial performance is significant. Heterogeneity analysis shows that the positive moderating effect of digital transformation on the relationship between corporate social responsibility and financial performance mainly applies to private firms, firms in the mature stage, and firms with low market competition. The article offers practical advice for businesses seeking to use digital transformation to maximise economic and social value.

Assessing the impact of environmental performance on corporate financial performance: A firm-level study of GHG emissions in Africa

Utilizing comprehensive firm-level data from 2005 to 2021 across various African nations, our study investigates the effect of a firm's greenhouse gas (GHG) emissions on its corporate financial performance (CFP). The research yields the following findings. First, we find that GHG emission intensity exerts a significantly negative impact on CFP measured by return on assets (ROA) and return on equity (ROE). This effect is consistently substantiated across different measurements of GHG emission intensity and CFP. Second, our analysis includes a series of stringent robustness assessments, all of which affirm the stability and resilience of our primary findings. Third, following the Paris Agreement, a decrease in GHG emission intensity correlates with a further rise in ROA and ROE. Additionally, we emphasize the pivotal role of industry-specific characteristics and regional variables in shaping the connection between GHG emission intensity and CFP. Our findings underscore that the influence of GHG intensity on a firm's financial performance is particularly pronounced within high-emission sectors in contrast to their low-emission counterparts. Furthermore, we show that the impacts of GHG emission intensity on CFP are primarily driven by firms operating in Southern Africa. Fourth, to recognize potential endogeneity concerns within the GHG emission-CFP relationship, we employ a two-stage least-squares regression (2SLS) approach. This method utilizes industry-level GHG emission intensity as the principal instrumental variable (IV), and in order to further mitigate endogeneity issues, we incorporate both lagged GHG intensity and the instrument proposed by Lewbel (2012) based on heteroskedasticity as additional IVs alongside the kinky least squares method by Kiviet (2020). The results derived from our 2SLS estimates consistently corroborate the negative effect of GHG emission intensity on CFP. Finally, our empirical findings carry significant implications for both corporations and policymakers.

How Tax Compliance, Audit Quality, and Financial Reporting Quality on Corporate Financial Performance in Manufacturing Companies

Within the framework of Indonesian manufacturing enterprises, this study explores the intricate links between tax compliance, audit quality, financial reporting quality, and firm financial performance. Using Structural Equation Modeling with Partial Least Squares (SEM-PLS), a sample of 175 firms was examined. The effect of these variables on financial performance was evaluated using correlation analysis, hypothesis testing, and descriptive statistics. The findings show a strong positive correlation between business financial performance, financial reporting quality, audit quality, and tax compliance. This study adds to the body of knowledge by providing complex insights specific to the Indonesian manufacturing industry. These insights can be used by investors, policy makers, regulators, and firm management to enhance decision-making procedures and promote sustainable financial practices in the sector.

Gender diversity in management and corporate financial performance: A systematic literature review

AbstractWith many studies on the participation of women in management positions, a systematic review of gender diversity and its impact on the financial performance of companies over the last 20 years is in demand. To this end, we conducted a literature review of 370 articles, 359 of which were empirical studies published in the most relevant journals of Finance and Business Administration. As a result of the analysis, the characteristics of the research, the main authors, the journals, the theories used, and the relationships between variables were identified. The results show that most research points to evidence of a positive relationship between female participation and financial performance under different aspects (e.g., return, risk, cost of capital, fraud, etc.). This study contributes to the academic debate on the relationship between gender diversity and firm performance. In addition to this review, we outline a theoretical framework and present future research agendas.

Assessing the effect of core and expanded ESG on corporate financial performance: COVID-19’s moderating role

PurposeThis study aims to investigate the influence of disclosing environmental, social and governance (ESG) factors on financial performance, taking into account the moderating effect of the COVID-19 pandemic.Design/methodology/approachA sample of the top 100 non-financial firms listed on the Bombay Stock Exchange, for the years 2019–2022, has been considered. Suitable panel regression models have been used to assess the impact of non-financial disclosure on accounting and market measures of firm performance. In addition, a panel data moderating effect model is used to assess the moderating impact.FindingsThe outcomes of the study partially favour the value-creation role of ESG disclosure. Specifically, the disclosure of already established ESG metrics, particularly social and governance aspects, positively impacts the market performance while environmental transparency negatively impacts the accounting performance. Of the three ESG components, only extended governance disclosure adds to market value. Results of the moderation effect reveal a significant impact of the pandemic on the ESG disclosure–financial performance relation. However, a more pronounced effect before the pandemic is observed. The results are robust to endogeneity.Originality/valueThis study sheds light on the financial consequences of ESG disclosure within the context of an emerging nation. This is done by using a novel holistic ESG reporting framework to obtain more accurate results. Furthermore, the study distinguishes itself by examining the long-term moderating influence of the unexpected COVID-19 crisis on the ESG disclosure–financial performance relation.

Do Intellectual Capital in the Relationship between Governance and Corporate Financial Performance, Strengthening or Weakening?

This study aims to identify and analyze the role of intellectual capital as a moderating variable in the relationship between governance and firm financial performance. Using panel data regression, this study analyses 412 observation units from 103 manufacturing companies listed on the Indonesia Stock Exchange during 2018-2021. The results show that, partially, both governance and intellectual capital have no significant effect on financial performance. However, when the governance variable has interacted with intellectual capital and a moderation test is conducted, it is found that the interaction variable has a significant effect on financial performance with a positive coefficient. This indicates that intellectual capital acts as a pure moderator variable of the positive effect of governance on financial performance. This result implies that in the absence of high intellectual capital, governance proves to be inefficient in its efforts to improve the firm's financial performance

The effect of green innovation on corporate financial performance: Does quality matter?

Green innovation is a new path toward sustainable social development. This study provides substantial evidence of the effects of green innovation on corporate financial performance. Using a sample of Chinese A-share listed companies from 2012 to 2021, we find that green innovation significantly improves corporate financial performance. However, this positive effect only exists in high-quality green innovation. Further, our mechanism analysis indicates that high-quality green innovation effectively improves firms' financial performance through competitiveness improvement effect.

Green Technology Innovation and Enterprise Performance: An Analysis Based on Causal Machine Learning Models

As increasingly stringent environmental regulations are put into effect, Environmental, Social, and Governance (ESG) concepts are being seamlessly integrated into the core of corporate innovation strategies. Due to the quasi-public product perspective of green innovation, the performance of enterprises as a result of green innovation activities exhibits significant heterogeneity. This heterogeneity exists not only between corporate value and financial performance but also among individual enterprises. This paper is based on a sample of 1510 listed Chinese companies examined from 2013 to 2020 and uses machine learning algorithms and quasi-natural experiments to precisely estimate the causal relationship and mechanisms between green innovation and corporate performance. The findings elucidate several critical aspects of green innovation within the corporate sphere: Firstly, rather than attracting green incentives from financial markets, green innovation activities inadvertently stifle the enhancement of corporate value. Secondly, these activities markedly bolster corporate financial performance, primarily by diminishing operational costs, which in turn elevates the return on assets (ROA). Lastly, of all corporate characteristics examined, enterprise size and equity concentration stand out as key determinants influencing the variability in outcomes of green innovation performance. The above findings provide information on the significant implications of enhancing green technology innovation systems and green incentive mechanisms.

Unveiling the Symphony of Economic Policies on Corporate Financial Performance: A Quantitative Revelation through SMARTPLS Analysis

This research investigates the influence of economic stimulus policy, fiscal policy, and the solvency risk of companies on their financial performance. Utilizing a quantitative approach, the study adopts regression analysis through SMARTPLS to analyze the data. Primary data for the variables - impact of economic stimulus policy, solvency risk of companies, and fiscal policy - were gathered, along with secondary data over a five-year period pertaining to the financial performance variable. The dataset was derived from 26 manufacturing companies listed on the Indonesia Stock Exchange (BEI). The findings reveal that both economic stimulus policy and fiscal policy exert a positive and significant effect on financial performance. In contrast, the solvency risk of companies does not exhibit a significant impact. This outcome suggests that while macroeconomic policies facilitate an environment conducive to financial growth, the internal risk management and financial structuring of a company play a critical role in leveraging these external benefits. The study underscores the importance of strategic internal management and effective risk mitigation practices in enhancing and sustaining financial performance amidst varying economic policies.

Corporate sustainability practices and financial performance: The moderating role of corporate controversies and Shariah screening

AbstractThis study examines the effects of corporate sustainability practices (CSP) on corporate financial performance (CFP). The study also examines the moderating role of corporate controversies and shariah compliance on the CSP‐CFP relationship. The results support the positive relationship between CSP and CFP. The study also finds that corporate controversies have a negative impact on financial performance and a negative moderating role on the CSP‐CFP relationship. This study also finds that Shariah compliance has a positive moderating role but loses its power when interacting with corporate controversies in influencing the impact of the CSP‐CFP relationship. An important implication of this study is that firms affected by controversy must find ways to mitigate the negative impact.

Wykorzystanie zasobów statystyki publicznej do oceny wpływu metrologii na gospodarkę

The purpose of this article is to discuss the usefulness of the resources of official statistics for metrology analysis and the assessment of the impact of metrology on the economy. Official statistics provide key information for metrology, including in particular: macroeconomic data, industrial output, corporate financial performance, science, technology and innovation statistics, as well as employment and income data. Conclusions from such a data analysis can help policymakers, business people and academic and research institutions understand the role of metrology in the economy, identify areas in need of support or investment, and plan strategies for the development of metrology-related sectors.

The impact of corporate social responsibility on firm financial performance: does corporate governance matter?

Purpose This study investigated how corporate social responsibility (CSR) impacts financial performance (FP) and examined the moderated role of corporate governance (CG). In particular, this paper aims to empirically examine the impact of CG on the relationship between CSR and FP. Design/methodology/approach This study was based on a sample of 200 firms over 2010/2021. The direct and moderating effects were tested by using multiple regression techniques. Findings The empirical findings indicated that companies with higher levels of CSR reporting invested more effectively than companies with lower CSR reporting levels. The empirical analysis suggested two main findings: CSR has a significant effect on FP, and this relationship depends on CG practices. This research presents new evidence that improves the discussion around CSR involvement and FP in French firms. Then, this research shows that CG positively moderates the impact of CSR on corporate FP. Originality/value These findings may be of interest to academic researchers, practitioners and regulators interested in discovering dividend policies, FP and CSR. The findings may interest different stakeholders, policymakers and regulatory bodies interested in enhancing CG initiatives to strengthen CSR because it suggests implementing a broadly accepted framework of good CG practices to meet the demand for greater transparency and accountability.