Corporate Financial Results Research Articles

Governance diversity: Its impact on strategic variation and results

AbstractThis paper investigates the impact of four drivers of Governance diversity, namely gender, tenure, age, and educational attainment, on strategic direction and variation. It then incorporates corporate financial results as a moderating variable, testing how it impacts the links between board diversity and strategic variation. Strategic variation or change is assessed based on measuring deviation from past strategies. Our sample consists of 5011 firm‐year observations from 930 firms in the United States between 2010 and 2018. The findings indicate that the four drivers of Governance diversity show a positive relationship between the corporate board of directors and strategic variation/change. However, the strength of the effect depends on overall firm results/performance.

Ratio Between Outsourcing Management Efficiency and Financial Results: Case Study in Brazilian Companies

The objective of this article was to investigate the impact of the efficiency level in the management of outsourcing on corporate financial results. For this, two companies in the industrial sector that adopted the outsourcing method in their operations were selected, considering the period from 2015 to 2019. The research is a descriptive exploratory case study with a quali-quantitative method. For the data collection, an instrument was used consisting of 8 (eight) management process efficiency indicators (iTEPG), 4 (four) analysis criteria and 5 (five) evaluation standards, intended for the formation of the Efficiency Rate. To define the Efficiency Rate, a mathematical model built from the literature studied was used. In order to reach the research objective, analyses were carried out in the financial and management reports, based on the Business Process Outsourcing (BPO) method. The results showed that the negative impacts on these company's financial results are directly related to the low level of efficiency in the BPO management process, and it can be said with reasonable certainty that poor outsourcing management contributes decisively to negatively impact in the financial results of organizations.

One Institutional Investor’s Approach to Integrating ESG in the Investment Process

This article intends to share one institutional investor’s approach to integrating environmental, social, and governance (ESG) factors in managing and overseeing the assets of the United Automobile Workers Retiree Medical Benefits Trust. This approach takes a comprehensive view of material, ESG-related factors that influence corporate financial results, which ultimately influence the investment performance of the Trust’s portfolio. Over the past couple of decades, the number of investors integrating some form of responsible investing has grown significantly. Nevertheless, a portion of the investment community still does not pursue ESG as part of the investment process. As with any decision in managing a pool of assets, one must be clear on governance structure, investment beliefs, investment objectives, risk tolerances, regulatory environment, and other considerations in designing an investment strategy. All of these important elements and dynamics are critical in designing and implementing an investment policy and strategy that best fits the asset owner’s circumstances. Hopefully, by sharing one investor’s perspective, this will prove useful for all investors as a data point for considering the role and approach of responsible investing in an investment program. TOPICS:Portfolio management/multi-asset allocation, ESG investing, portfolio theory, portfolio construction Key Findings • Investors should consider environmental, social, and governance (ESG) factors as a complement to traditional fundamental analysis of corporate financial results because this more comprehensive view might uncover unintended or mispriced risk. • Integrating an ESG evaluation tool in an intuitional allocator’s manager research and selection process can give additional information as to how the investment manager accounts for risk beyond the financial statements of a corporation. • Although over 86% of the constituents of the S&P 500 Index provide a report on their sustainability efforts, further standardizing reporting and disclosure will assist investors in understanding how decisions by the corporations can affect financial results.

What Does Japanese Corporate Governance Reform Mean?

In Japan, since 2013, Japanese corporate governance reform has been developed by Japanese Government initiatives. This paper provides a theoretical framework for understanding what Japanese corporate governance reform means for Japanese companies by an application of agency theory. Corporate governance is a structure which determines how shareholders delegate corporate control to managers and monitor managers’ business executions. Debates on corporate governance finally end in how we should resolve agency problems which decide what is the best measures to maximize corporate value by reducing agency costs deriving from an agency relationship between shareholders and managers. New Japanese reform further develops previously introduced measures for improving corporate governance in order to reduce agency costs. Now some changes in corporate financial results are recognized in stewardship reports by institutional investors. This reform is facilitated by an introduction of Japanese Stewardship Code and leveraged by a collaboration between Corporate Governance Code and Japanese Stewardship Code to seek a long-term corporate growth. Key to success to a corporate governance reform is a synchronized collaboration between these two codes, which puts burdens of execution on institutional investors who take stewardship activities effectuating a governance reform. Agency theory focused on principal costs provides us with interpretation of the reform and implication of possible changes in corporate governance and their solutions. One possible hint for solutions is disclosure of stewardship activities including engagement activities by institutional investors.

Reengineering of production processes and its impact on the financial situation and business performance of the company

Abstract The current competitive environment is only favourable to those companies that can cope with changes and use them to their advantage. The innovation of business processes is required to improve financial performance. Scientific works have not yet offered an effective solution to the monitoring of the impact made by process reengineering on corporate financial results. This work presents the case of a business process reengineering in a particular company to improve its performance. The results of implemented reengineering are analysed from the point of view of the impact made on the financial situation of the company. The paper aims to demonstrate the implementation of reengineering and evaluate its impact on the financial standing of a company and its performance. The practical application of reengineering was made according to Hammer and Champy methodology, which is based on the analysis of production processes in the company, the implementation of selected reengineered production processes and the evaluation of the reengineering impact on the corporate financial situation and performance. During the evaluation, the selected indicators of financial performance, activity indicators, the indebtedness indicator, business performance indicators as a cash flow to measure financial flows and the economic value-added (indicator EVA) were calculated and analysed. Subsequent to financial analyses and based on the selected indicators, the authors concluded that the implemented reengineering of the production process increased the performance and value of the company, which had a positive impact on the company’s financial situation. The funds spent on the proper implementation of the reengineering steps were effectively used, and the reengineering process was also timed. This contribution to the body of theoretic knowledge links the implementation of reengineering and the part of the financial analysis, which is related to the preparation, implementation and reengineering results.

Corporate sustainability accounting information systems: a contingency-based approach

Purpose This paper aims to explore the development of sustainability accounting information systems through lens of contingency theory. In this digital age when companies are confronted with massive sets of data, integration of financial and non-financial data, little empirical evidence exists on how sustainability issues are integrated or linked within internal corporate information systems. Design/methodology/approach A questionnaire-based survey, hypothesis testing, principal component methods and hierarchical clustering are used to provide original empirical evidence from major Lithuanian companies. Findings The main findings reveal that most companies surveyed include a sustainability strategy in their core strategy, but there is a lack of linkage with measuring and integrating sustainability outcomes within the entirety of corporate financial results. Unexpectedly, the association between stakeholders' involvement and sustainability accounting information system design was not as strong as hypothesized theoretically. Therefore, it deserves further investigation, constituting an important implication for future research. Specifically, three profiles of sustainability accounting information systems were explained, namely, integrated, fragmented and compliance systems. Research limitations/implications The limitations of this study relate to the small sample size, as sustainability-related information is still regarded quite confidential. Practical implications This result could serve as a specific reference for companies to apply integrated sustainability accounting information systems that might serve as a good practice model for companies, however, fragmented and compliance profiles are the prevailing ones. Social implications The findings are important for fostering corporate social responsibility by developing sustainability accounting information systems. Originality/value This paper contributes to the sustainability accounting and information systems literature by providing empirical evidence linking contingent factors with the development of sustainability accounting information systems.

The framing and reframing of corporate financial results

Purpose– News agencies are important stakeholders for large organizations, since the news they distribute will be adopted by other news outlets, which influence public opinion and hence corporate reputation. The purpose of this paper is to advance the understanding of how corporate earnings press releases are transformed into financial news by investigating whether the frames introduced by companies are adopted or reframed by news agencies.Design/methodology/approach– A content analysis of framing techniques in corporate earnings releases and their corresponding news-agency releases was performed, focussing on the financial figures and benchmarks presented, performance attributions, and the tonality of the texts.Findings– The findings suggest that news agencies reframe earnings releases at the textual-pragmatic level by reducing their length, using fewer financial figures, and changing the position of these figures in the texts; they increase transparency by avoiding adjusted financial figures, qualifying figures, and adding analyst assessments; and they change the tonality by down-toning positive statements and highlighting negative aspects.Originality/value– This paper makes a contribution to the field of corporate financial communication, which has not shed much light on the transformation of earnings press releases into financial news. In addition, this paper contributes to the stream of research on journalistic transformations of corporate press releases in general, which has ignored the influential role of news agencies as both manufacturers and wholesalers of news.

How Much Cash Is At Risk In U.S. Non-Financial Firms? A VaR-Type Measurement

<p>Risk management techniques first developed by, and for, banks are now being adopted by non-financial corporations. However, while firms are already engaged in activities intended to develop their risk management practices, they often do not possess risk measures focused on key corporate financial results such as earnings or cash flow. The main contribution of this paper is to develop a cash flow-based risk measure conditional on specific company-level factors. With U.S. firm-level data, we present evidence that Cash Flow-at-Risk and Expected shortfall differ across main non-financial industries. Our results call for renewed attention to the role that VaR-type measures for cash flow can play in empirical studies dedicated to corporate risk analysis, and with respect to corporate-level risk management purposes.</p>

Factors Influencing IPO Decisions. Do Corporate Managers Use Market and Corporate Timing? A Survey

Abstract This paper explores the motives for Initial Public Offerings (IPOs); that is, whether market mispricing or the behavioral inclinations of investors and analysts impact corporate decisions about rising equity, with a particular focus on market and corporate timing practices of managers going public. To do so, an anonymous survey was conducted of 166 managers of firms that recently went public at the Warsaw Stock Exchange in Poland (being the second most active IPO market in Europe, after London). The resulting data reveals that managers attempt to time bullish markets and good historical corporate financial results.

Is Sales Growth Of Companies Listed On The Warsaw Stock Exchange Mean-Reverting?

Empirical research shows that corporate financial results (measured by sales growth, profitability, earnings growth, leverage, etc.) are characterized by the long-term reversion toward the levels average for the whole economy. In the case of sales growth this means that companies which in a given year show above-average growth in the following periods express the tendency to show slower pace of this growth and companies which in a given year show below-average growth in the following periods express the tendency to show faster pace of growth. In the paper we explore the reversion toward the mean of the sales growth of companies listed on the Warsaw Stock Exchange in the period of 2001-2009. The research confirmed the strong tendency of sales growth to revert toward the mean.