Corporate Firm Performance Research Articles

Environmental, social, and governance (ESG) performance and financial outcomes: Analyzing the impact of ESG on financial performance

BackgroundEnvironmental Social Governance (ESG) investment had entered a phase of rapid development in the past few decades as most nations had put forward “carbon neutral” initiatives. ESG would receive more attention from the industry and academia in a global environment full of uncertainties. Companies benefit from the sharing of ESG data by improving their brand image, which attracts funding, lowers financing costs, and increases valuation. PurposeTo explore how ESG drives corporate financial performance. Also, the research examines the interrelation of ESG presentation and corporate presentation. Design/methodology/approach: Over an interval of 10 years (2011–2020) using a sample of 3332 listed organizations worldwide. The theory of the research is on the basis of stakeholder and transmitting signal theory and multiple regression and categorized regression were applied with STATA 16.0 software. ResultsThe study utilizes a large dataset of 24,076 valid observations, providing robust statistical power for the analysis. The study findings proved that ESG performance is positively interrelated with corporate performance (p < 0.01). According to the findings of the study, at 1% of the level related to significance (p < 0.01), the regression coefficient for ESG is considerably positive. Thus, the influence of ESG rating on corporate performance is significant for large-scale companies and insignificant for small-scale companies. The results demonstrate that the positive impact of ESG rating on corporate financial performance is more pronounced in the high risk case than in the low risk case (p < 0.01). The results highlight the importance of ESG performance in today's world. Overall, the study gives precious perception about the interrelation between ESG and corporate financial performance (CFP). Policy implicationsThe researchers believe that the results of this study are beneficial to companies and governments in the development of environmentally conscious industries since they demonstrate corporate success through ESG. More realistically, the ESG can boost corporate firm performance by enabling businesses to maintain sustainability, establish a solid reputation, win the trust of stakeholders, and contribute to solving national sustainable development issues. Additionally, the researchers believe that the results of this study can boost management effectiveness, which in turn can help firms succeed. Originality/valueIn the context of environmentally sensitive industries, this study findings provide empirical insights to the association between the corporate firms success and ESG performance. In addition, the findings provide insights to the business organizations development and the significance of ESG integration in the business organizations.

Beyond “good company”: The mediating role of innovation in the corporate social responsibility and corporate firm performance relationship

PurposeThe link between corporate social responsibility (CSR) and corporate firm performance (CFP) has been extensively studied, but a significant research gap remains when considering potential mediating factors that can provide a more comprehensive and complete picture of the CSR-CFP link. Among the possible mediators, innovation is one of the most noteworthy factors, but previous studies have found inconsistent results between CSR and innovation in the service industry context. Existing studies have reported an insignificant or negative relationship between CSR and innovation in the service industry, including the hospitality industry. To clarify this controversy, this study aims to propose the positive mediating role of innovation to explain the CSR-CFP link in the hotel and casino industry.Design/methodology/approachTo discover the relationship among CSR, innovation and CFP, a panel data analysis, the two-way fixed-effects model, is used with robust standard errors. Particularly, to examine the mediating role of innovation, this study conducts Sobel, Aroian and Goodman tests. The sample period is from 2000 to 2017, consisting of 342 firm-year observations.FindingsWith a sample of publicly traded US hotel and casino firms, this study confirms the mediating role of innovation and suggests a strategic direction of CSR, highlighting the importance of innovation in the hospitality industry.Practical implicationsThis study presents an important piece of evidence regarding non-technological innovation and proposes a strategic direction of CSR in the hotel and casino industry to achieve competitive advantages.Originality/valueAdopting a new measurement method of innovation using data envelopment analysis, this study serves as a reference for a better understanding of a role of innovation in the CSR-CFP link for hospitality scholars.

EFFECTS OF AUDIT AND NON-AUDIT SERVICES FEES ON CORPORATE PERFORMANCE OF FIRMS LISTED IN PAKISTAN

Purpose of the Study: The main purpose of this study is to examine the effects of the provision of audit and non-audit services jointly by the same audit firm on the corporate performance of firms in the capital market of Pakistan.&#x0D; Methodology: This study uses hand-collected secondary data taken from firms' financial statements, the Pakistan Stock Exchange (PSX), the State Bank of Pakistan (SBP) for 2012-2016. Panel data analysis techniques are employed using E-views statistical software.&#x0D; Main Findings: we find a negative relation between audit and non-audit services fees with the firm performance. It is also documented that the appropriate amount of the NAS fee exceeds the amount of the audit fee received by the same auditor in the same assignment.&#x0D; Application of the Study: This study has vital implications from both theoretical as well as practical perspectives. It adds a significant aspect of audit and non-audit services provided in the context of Pakistan to the existing body of knowledge/literature. This study also implies the bifurcation of audit services provision and its serious implications on the corporate sector of Pakistan. These results thus, signify its implications for regulators as well as standard setters in Pakistan.&#x0D; Novelty/Originality of this Study: Various studies covering the audit aspect have been conducted in Pakistan. However, this is a unique study covering the multi-facet dimensions of audit, i.e., audit and non-audit services provision by the same audit firm and its effects/implications on corporate performance in Pakistan.

Faktor – Faktor Yang Mempengaruhi Kinerja Perusahaan Manufaktur

This study was conducted to examine the effect of board of directors size, board gender, independent commissioner,institutional ownership, firm size, and debt ratio on firm performance in listed manufacturing companies in Indonesian Stock Exchange (IDX) period 2016-2018. The sample used in this study is 73 manufacturing companies. This study used fixed effect model and multiple regression analysis. The results of this study indicate that board of directors size, board gender, institutional ownership, and firm size have a insignificant effect on firm performance, independent commissioner and debt ratio have a significant positive effect on corporate firm performance.

Corporate Carbon Disclosure, Carbon Performance and Corporate Firm Performance

The primary objective of this study is to examine the current state of corporate carbon disclosure (CCD) among a sample of FTSE 350 non-financial firms. It also investigates the effect of CCD on firms' carbon emission performance and corporate financial performance (CFP). This study adopts a quantitative approach to fulfil its aims. In particular, it quantifies the level of CCD reported by non-financial companies listed in the FTSE 350. A number of regression models are developed to examine relationships that are assumed. The results demonstrate that CCD can significantly enhance a firm's carbon performance. Further, the findings reveal that CCD can boost firms' financial performance. The findings provide some policy implications for regulators, preparers, and investors on the usefulness of voluntary disclosure, including carbon information.

Corporate carbon disclosure, carbon performance and corporate firm performance

Corporate carbon disclosure, carbon performance and corporate firm performance

Impact of Firm Performance on Corporate Governance Quality: The Case of Nigerian Manufacturing Firms

In this study, the reverse impact of firm corporate performance on board structure is empirically examined using a large cross section of 50 manufacturing firms in Nigeria. The study makes a divergence from previous studies by noting that such a reverse effect is possible and examining this effect of performance on board structure in Nigeria. The panel data estimation technique is employed on the pooled data for the firms over a ten-year period (2004-2013) and estimation is performed using four measures of firm performance and two measures of board structure. The results show that there is actually reverse impact of firm performance on board structure although the effect is quite weak. The only performance variable that exerts significant impact on board structure (board size and independence) is earnings per share and, to a lesser degree profit margin. Moreover, firm size is shown to be an essential factor in explaining the general behavior of firm performance and also the pattern of effect of such performance on the board structure. The analyses clearly showed that firm size is itself a strong positive factor in improving firm performance and also tends to improve the effect of high performance on board structure across the firms.

Corporate governance mechanisms and corporate performance of firms in Nigeria and Ghana

PurposeThis study investigates the impact of corporate governance (CG) mechanisms with inclusion of compliance and diligence index on corporate performance (CP) of firms in Nigeria and Ghana. It further examines the moderating effect of financial distress on the relationship between CG and CP.Design/methodology/approachThe study used panel data of 102 nonfinancial listed firms of Nigeria and Ghana stock exchange for the period 2012–2016 with total observation of 510. The study first used OLS in estimating the influence of CG mechanisms on CP. Due to multicollinearity in the independent variables, ridge regression was employed.FindingsIt was revealed that ownership structure index and board compliance and diligence index, board size, board disclosure, ownership structure, shareholders' right and board compliance and diligence index had positive influence on ROA and ROE. Growth of Tobin's Q depends on board procedure and board compliance and diligence index. Also, financial distress (ZFS) negatively moderates the relationship between board structure index, board disclosure index, board procedure index, shareholders' right and performance (ROA and ROE) but negatively moderates between ownership structure index and Tobin's Q.Practical implicationsThis study provides interesting findings to policymakers in full implementation of CG codes as stated by OCED (2015) by West African firms with greater emphasis on compliance and diligence index since it positively influences all CP measures.Originality/valueThe study provides evidence of the importance of the introduction of the new index: compliance and diligence, which looks at disclosure of CSR activities. This has been overlooked by most researchers especially in Africa in assessing quality CG mechanisms.

Nexus between corporate social responsibility and financial and non-financial sectors' performance: a non-linear and disaggregated approach.

The objective of this study is to examine the relationship between corporate social performance (CSP) as proxy of corporate social responsibility (CSR) and corporate firm's performance (CFP) in the context of Pakistani financial and non-financial firms sectors. This study comprises two main firm's performance indicators such as market base (excess stock returns) and accounting base (returns on assets and returns on capital). The data set starts from 2011 to 2017 and consists of three hundred and fifty (350) firms on equal numbers of financial and non-financial firms. This study uses a non-linear and disaggregated approach for data analysis. The results of the linear model indicate that CSP and returns on capital have a negative relationship, while the non-linear model of CSP and accounting base performance as CFP have positive association in the domain of long run. There is a significant relationship that exist among environmental social governance (ESG) disclosure score, government sub-components score, and social performance. However, a U-shaped association found between CFP and government sub-components, which further suggest that governance has a vital role toward CSP and CFP components.

Analysis of corporate sustainability performance and corporate financial performance causal linkage in the Indian context

This paper aims to explore the relationship between corporate sustainability performance (CSP) and corporate firm performance (CFP) for a sample of the top 500 Indian firms covering the period from 2008 to 2018. CSP variables have been considered at both aggregate and disaggregate levels of environmental, social and governance performance. CFP has been evaluated in both accounting and market-based measures. Rigorous statistical methods have been used to evaluate the bidirectional causality and intensity of the CSP-CFP relationship using the Granger causality test and multiple regression for panel data. A sectoral level trend analysis is presented dividing the firms in various industries and classifying them in ESI vs non-ESI sectors. The findings indicate the absence of causality among CSP and CFP variables in either direction and suggest that the CSP-CFP linkage is mostly insignificant for Indian firms at the aggregate level. At an individual level, some negative association is found between CSP and CFP. This relationship has an adverse impact on CSP-CFP linkage in both cases, which means that Indian firms don’t get the financial performance benefits of investments done for sustainability. Our findings with mostly insignificant results for this relation also means that firms with higher or lower CSP on ESG dimensions will perform likewise in terms of CFP. The findings have practical implications for corporates, academicians, and policymakers alike given sustainability as a high focus area for all.

Earnings Management and Corporate Performance: An Empirical Evidence from Ghana

This study aimed at assessing the impact earnings management has on corporate performance of firms on the Ghana Stock Exchange. The study used discretionary accruals of the modified jones model, abnormal cashflow from operations, abnormal discretionary expenses and abnormal production cost to measure earnings management whiles corporate performance was measured using return on assets. The study used a sample of 14 listed companies on the Ghana Stock Exchange (GSE) for the period of 2008 to 2018. We applied multiple linear regression for hypothesis testing. The findings of the study indicate that firm listed on the GSE engages earnings management and manages earnings upwards. Our results indicate earnings management through both accrual earnings and real earnings management techniques have a significant positive effect on corporate performance. Therefore, we recommend an intensive evaluation by the users of financial statements to make competent decisions. Keywords : Accrual Earnings Management, Real Earnings Management, Discretionary Accruals, Corporate Performance DOI: 10.7176/RJFA/11-10-01 Publication date: May 31 st 2020

외식기업의 자본구조가 기업성과에 미치는 영향에 관한 연구

This study examined the relationship between capital structure and performance of firms in the food service industry. The sample in the study is firm-year data compiled from 30 food service industry firms listed on the Korea Exchange from 2010 to 2018. A panel regression model was used for analysis considering that the sample has properties of the panel data. Dependent variables in our model were the proxies for the firm performance, such as stock price, return on assets, and return on equity. Explanatory variables were capital structure, such as total liability ratio, current liability ratio, and non-current liability ratio. In addition, control variables were selected as variables that were deemed to affect the firm performance, such as firm size, asset intensity, firm age, sales growth rate, and advertising expenses. We found that capital structure had a significant negative (-) effect on the financial and accounting performance of the firms. This implicates that, on the basis of the theory of trade-off capital structure, the firms use a relatively high level of debt compared to the optimal capital structure. Given that there have been few of studies on the relationship between capital structure and corporate performance of firms in the food service industry in Korea, this study is expected to contribute to activating research related to this area in the future.

A Review of Literature Regarding the Connection between Human Resource Accounting and Corporate Performance of Firms

The evaluation as well as the estimation and reporting of cost and value of people in the organization setting is known as Human Resource Accounting (HRA). The need for this form of accounting is eminent because, with the presence of all the other factors of production, little or nothing can be achieved in an organisation without the contribution of man hence the need to measure and account for human resource. The main objective of this paper is to review extant literature on the nexus between HRA and corporate performance of firms. Many studies have indicated the impact of human resource accounting on the performance of the firm. This review also found that, lack of precision in current measurement practices about what should be reported about HRA or what constitutes HRA, has created a room for researchers to use varying proxies for HRA leading to mixed results in their findings. This review therefore recommends further research into this area to fill the gap in literature.

Board Characteristics and Corporate Performance: Evidence From Palestine

This paper investigates the relationship between board characteristics and corporate performance of firms in Palestine. The degree to which the board would be effective in performing its duties and tasks depends on several factors manifested by certain characteristics. Particularly, this research examines the impact of CEO duality, board size, board independence, board gender diversity, board academic background, and frequency of board meetings on the level of corporate performance. The sample encompasses all firms listed in the Palestine Stock Exchange (PSE) for the years 2012 to 2014 and have the required data totaled 141 firm-year observation. The data was manually collected from the audited annual reports downloaded from PSE website. Generalized least square estimators are obtained for the multiple linear relationship between board characteristics and firm performance. The results indicate that corporate performance of Palestinian listed firms is positively related to board duality, board gender diversity, and number of board meetings. Meanwhile, board size, board independence and board academic background seem to negatively affect performance. These results are more consistent with the stewardship theory where the board plays a supportive role by empowering executives and, in turn, increase the potential for higher performance. In this context decisions are executed faster, the ambiguity between the processes and the objectives of the firm is reduced and performance is enhanced. Our results have an implication to policy makers. For any future governance code, the stewardship theory not the agency theory should guide the lawmakers or legislators.

Dynamic relationship between corporate board structure and firm performance: Evidence from Malaysia

AbstractCorporate governance is being acknowledged by almost all kinds of business communities and firms as an ultimate driver to improve the firm financial performance. This study examined the association between corporate board structure and corporate financial performance using a dynamic panel model. Principles of corporate governance deliver an explicit board structure for the purpose to facilitate the board members, which helps in making good decisions. The board of directors consists of the CEO, the chairman, the internal directors, and the external non‐executive directors to work for the shareholders. This study undertakes different corporate governance attributes including non‐executive directors, board size, and CEO duality and examines its effect on firm performance. The dynamic panel model is used, and preestimation and postestimation tests were conducted for the validity of the model. This study found a significant effect of board size, CEO duality, and non‐executive directors on firm performance. The findings show that most of the governance variables are endogenous by nature. Results are consistent with agency theory. This study provides the theoretical and empirical evidence and applies a superior model (dynamic panel model) to better explain the association between corporate board structure and corporate firm performance in listed firms.

Management control system, corporate social responsibility, and firm performance

The aim of this study is to examine, through corporate reputation and double-loop learning, how Management Control System (MCS) in the form of a diagnostic and interactive system positively and significantly affects corporate social responsibility (CSR) and the firm performance (FP). This study uses a sample of 163 respondents who are middle to top level managers of manufacturing companies in Banten Province. We test hypotheses by using structural equation modelling, especially SmartPLS. We find that the effect of MCS on CSR does not directly affect the corporate firm performance, and that reputation and Double-Loop Learning (DLL) do mediate better firm performance. The study implies that MCS can help the company to support the process of CSR application more effectively when it matches performance to the expectation of stakeholders. In addition, manufacturers must maintain their reputation and increase their double-loop learning to seize opportunities as a result of their socially responsible activity, and to achieve optimal corporate firm performance.

Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms. Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014. The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003. The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.

Corporate governance, innovation input and corporate performance

PurposeThis paper aims to find the endogenous relationship between innovation input and corporate performance and deepen the study of innovation performance theory in industry and enterprise at the micro level.Design/methodology/approachThis paper selects the firms listed on A shares in Shanghai and Shenzhen Stock Exchanges from 2009 to 2015 as samples. The authors cluster these samples according to the factors of production and classify the samples into three types: technology-intensive, capital-intensive and labor-intensive. After obtaining the samples and classifying them, the authors conduct a research on the endogenous relationship between the innovation input and the corporate performance through the simultaneous equations model and 3SLS estimation method. Meanwhile, they also make a study on the influence of executive incentive mechanism on the relationship between the innovation input and the corporate performance.FindingsIn technology-intensive industry, the increase of pre-innovation input will enhance the corporate performance in the current period, however, which will slow down the pace of innovation and lead to lower corporate performance in the future, and then increase innovation input again. In contrast, in capital-intensive industries, innovation input just improves corporate performance in the current period and the promotion of corporate performance will promote the intensity of innovation input in the future. With labor-intensive industries, innovation input also depends on early good returns, but innovation input has no significant impact on the corporate performance both at present and in the future. While in the executive incentive mechanism, salary incentive has a significant positive regulatory effect on the relationship between innovation input and corporate performance.Originality/valueThis paper presents a new research perspective on the relationship between innovation input and firm corporate performance, which is of great value to the listed company in balancing the R&D input with the company’s target performance and the design of executive incentive mechanism.

Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms. Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014. The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003. The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.&#x0D;

Empirical examination of organizational culture on accounting information system and corporate performance

PurposeThe study aims to empirically examine the impact of organizational culture on accounting information system and corporate performance of firms in Ghana.Design/methodology/approachA survey was conducted using top corporate executives of diverse firms from different industrial sectors. The data were analyzed using structural equation modeling (SEM) and a further post hoc test was done using analysis of variance (ANOVA).FindingsThe study demonstrates that there is a statistically significant relationship between organizational culture on accounting information system and corporate performance. The results indicate that mission, adaptability and consistency dimensions of organizational culture were significant and also accounting information system influences corporate performance. Moreover, there are significant differences in the means of accounting information system on different industrial sectors.Research limitations/implicationsThe study is limited to the extent that only overall profitability was used to measure performance. In addition, the study did not control for leadership style and organizational structure in the relationships. The implication of the study is that ethical culture-shaped accounting information system and financial reporting practice which ultimately leads to corporate performance.Originality/valueGhana is a developing country where structures and institutions are not well developed. Businesses and organizational forms are now beginning to pick up; therefore, organizational culture, accounting information systems and their impact on corporate performance are not well documented. These are all new phenomena in this part of the globe. The context of Ghana in terms of national culture that feeds into organizational culture, institutions, quality and application of accounting information is entirely different from that of advanced countries. The study therefore contributes to the extant literature by applying the constructs of organizational culture, accounting information system and corporate performance within a developing country perspective.