Financial Performance Research Articles

Beacons not burdens: Business groups and corporate social performance around the world

AbstractResearch SummaryPrior studies on business groups (BGs) have predominantly focused on the impact of group affiliation on financial performance. In contrast, we argue that BG affiliates will outperform standalone firms in terms of corporate social performance (CSP) and that this effect will be positively moderated by the strength of formal and informal institutions. Moreover, we examine also differences among BGs and hypothesize that diversification and hierarchy of the group will negatively affect the CSP of affiliates. Employing a panel of 4368 firms from 43 countries between 2003 and 2016 and a propensity score matching approach in our regressions, we find robust support for these predictions. Our findings advance two distinct strands of literature on BGs and, respectively, corporate social responsibility.Managerial SummaryBG are a common organizational structure in many countries. Despite this, we still do not know much about them beyond their financial performance. In this study, we focus on examining the impact of BG affiliation on non‐financial performance (i.e., CSP) in the light of growing societal grand challenges. Using an international dataset of several thousands of firms, we find out that BG affiliates exhibit superior CSP results compared to non‐affiliated firms. These positive effects of affiliation are increased in environments with strong formal and informal institutions but reduced within groups that are more diversified and hierarchical. Our findings showcase the importance of BGs in tackling some of today's grand challenges and provide support for more nuanced approaches to study BGs across countries.

The Role of Strategic Management Accounting Techniques in the Improvement of A Company’s Financial Performance: The Case of low-cost Airlines

This article presents a unique exploration of the role of Strategic Management Accounting techniques in supporting decision-making. This perspective has not been extensively studied in the context of low-cost airlines. This accounting branch is characterized by providing external, financial, non-financial, long-term, and forward-looking information, expanding the informational framework for strategic management and decision-making. The methodology relies on the application questionnaires and the financial performance analysis of fifteen low-cost airlines in America and Europe. Structural equation models were applied to test the relationships among the variables. The results evidence that the strategic management accounting techniques that positively and significantly affect the financial performance of the analyzed low-cost airlines are the ones related to the group of costing and strategic decision-making.

Analisis Struktur Modal terhadap Kinerja Keuangan Perusahaan yang Terdaftar di Bursa Efek Indonesia Periode 2018-2022

"Capital Structure Analysis of the Financial Performance of Companies Listed on the Indonesian Stock Exchange for the 2018-2022 Period (Case Study of Pt Blue Bird Tbk)". under the guidance of Mrs. Dr. Milka Pasulu, SE., M.Si, and Fausiah, S.E., M.Si. This research aims to determine the effect of capital structure policy on the financial performance of PT Blue Bird Tbk. The research sample is the 31 December financial report regularly for 5 years in accordance with the research period required for the periods 2018, 2019, 2020, 2021 and 2022 (The financial report as of 31 December is a financial report that has been audited). The results of the analysis found that the company PT Blue Bird Tbk for the 2018 – 2022 period, where analysis of capital structure policies to measure financial performance obtained poor results. Regarding this, the values ​​obtained from DER, DAR, ROA and ROE measurements experience fluctuating percentages (rising and falling).

Evolution of financial intermediation and performance consequences in China’s commercial banks

PurposeThis study evaluates the evolution from traditional to nontraditional financial intermediation (NTFI) in Chinese commercial banks from 2006 to 2021, analysing its impact on bank performance and risk.Design/methodology/approachAccounting measures are used to construct granular activity data, and factor analysis is employed to develop a financial intermediation evolution (FIE) index. The fully modified OLS (FMOLs) estimator is used for nonstationary data analysis, and difference-in-differences (DID) analysis is used for robustness check.FindingsChinese banks exhibit unique evolution in financial intermediation compared to developed economies, with greater inter-bank variations over time than intra-bank differences. From 2006 to 2017, three paths were identified: Investment, Fee and Repo models, with a fourth path (the Investment2 model) emerging post-2017. Only the Repo model enhances bank returns (ROA & ROE), while shifts towards NTFI increase liquidity and leverage risks across all models. The evolution of bank business models and their consequent implications on performance and risks are influenced by regulatory objectives and banks’ endeavours in regulatory arbitrage.Practical implicationsMajor stakeholders in the banking sector can gain a better understanding of financial intermediation and associated market behaviour, performance and risks, with significant implications for banking regulations and crisis management.Originality/valueThis study provides the first comprehensive overview of the evolution of Chinese commercial banks’ financial intermediation activities over an extended period, uncovering the unique characteristics distinct from the developed economies.

Levels of mandatory CSR compliance and the payoff: evidence from India

Purpose This paper aims to examine the diverse levels of corporate social responsibility (CSR) expenditure among Indian companies and its influence on their performance. The study aims to determine whether exceeding the mandatory CSR spending limit provides an edge to companies that outperform in enhancing corporate firm value. Design/methodology/approach A dynamic model using system generalized method of moments (GMM) was used to analyze a balanced panel data set of 191 firms over seven years, spanning from 2016 to 2022. Return on assets was used as a proxy to gauge financial performance. At the same time, the study also examined the robustness of the results by considering return on equity and Tobin’s Q as additional measures. Findings The study results indicate that, in a mandatory CSR setting, all companies are generally perceived as performing and reporting on CSR equally. Hence, it will not make any payoff, although few companies outperform. Therefore, companies should differentiate themselves regarding CSR spending and reporting to claim a competitive advantage in the market. The study also suggests that the payoff of mandatory CSR expenditure for both performing and outperforming companies is reflected more in non-quantifiable firm characteristics than in measurable performance metrics. Research limitations/implications The period of study covers 7 years, i.e. 2015–2016 to 2022–2023. This may limit capturing long-term CSR practices and firm performance trends. Additionally, data from only 191 Indian companies restrict generalizability; future research should include diverse geographic regions with mandated CSR spending to provide a more comprehensive view. In subsequent studies, contextual factors like regulatory changes and macroeconomic conditions could be considered moderating variables. Practical implications The study provides valuable insights to top management, indicating that spending beyond the threshold limit of mandatory CSR spending does not enhance corporate firm value. Instead, this additional investment may yield benefits in the form of goodwill and reputation over the long term. Social implications This study assists corporations in optimizing their CSR strategies to enhance their social and financial performance impact. Moreover, the study suggests ways to improve the CSR payoff and the need for increasing stakeholder satisfaction. Originality/value The study provides original insights into the relationship between mandatory CSR spending and firm performance in the Indian context, revealing that CSR spending does not significantly impact financial metrics, and it highlights the importance of considering a non-quantitative matrix to enhance the firm value in a mandatory CSR setting.

MEDIATION OF EFFICIENCY IN GREEN BANKING ON THE FIRM VALUE OF CONVENTIONAL BANKING

This study aims to investigate the effect of green banking on firm value with bank efficiency as a mediating variable. The research approach used is quantitative with a sample consisting of 12 conventional banks from 48 annual reports and sustainability reports of banking companies in Indonesia. The data were analyzed using SEM-PLS. The test results show that green banking and bank efficiency have a significant positive effect on company value, green banking has a significant positive effect on bank efficiency and bank efficiency is unable to mediate the relationship between green banking and company value. This study shows the benefits of implementing green banking which is currently being carried out by the government and proves that environmental aspects have an important role for the sustainability of a business, so that the company does not only focus on financial performance but also on environmental aspects.

Relationship Between Leverage and Financial Performance of Agricultural Firms Listed in Nairobi Securities Exchange

Relationship Between Leverage and Financial Performance of Agricultural Firms Listed in Nairobi Securities Exchange

Blockchain-enabled integrated three-layer bio-circular economy model with wastewater treatment, emissions, and controlled cheese spoilage

ABSTRACT Regulatory and market forces compel companies to integrate transparency and sustainability into their operations. In response to the pressing need, the study proposes a blockchain-enabled, sustainable, integrated three-layer inventory model for the cheese industry under carbon cap-and-trade policy. The ultimate aim is to maximize the integrated total profit of the system with optimal investment in green technology. Prior studies have neglected to account for blockchain costs and spoilage rate control, whereas our findings demonstrate that strategic investments in preservation technology yield substantial reductions in spoilage rates. Results indicate that the downstream end of the supply chain, retail, also plays a crucial role in maintaining total profitability, indicating the significance of collective inventory management along with sustainability initiatives. This study concludes that technology-driven sustainability initiatives, coupled with effective spoilage management, can optimize sustainability outcomes in the cheese supply chain without compromising financial performance.

Analisis Laporan Keuangan untuk Mengukur Kinerja Keuangan pada PT. Asia Sejahtera Mina Tbk

This study aims to determine the financial performance pf Pt. Asia Sejahtera Mina Tbk. Using two ratios, namely likuidity and profitability, this study uses a quantitative descriptive method using secondary data analysis in the form of financial reports for the period 2019-2023. Research findings based on likuidity ratio analysis show that the current ratio, quick ratio, and cash ratio are used by researchers to determine whether the company’s likuidity threshold in 2019-2023 fluctuates. And based on the relative profitability analysis, it shows that return on infestment and return on equity also fluctuate

Corporate Governance, ESG, Audit Committee and Financial Performance in European Investment Holding Companies

The purpose of this research paper is to explore the connection between Corporate Governance, Environmental, Social and Governance (ESG), Audit Committee (AC) and Financial Performance in European Investment Holding Companies. This paper aims to understand whether there is a correlation between these elements. The study answers the following research question: "What is the impact of corporate governance indicators, ESG and financial performance on investments in public holding companies in Europe?" Our findings reveal significant correlations between corporate governance structures and financial performance metrics, as well as the influence of ESG ratings on financial performance and corporate governance. Additionally, we identify the effects of audit committee characteristics on financial performance and ESG outcomes. The reported data is collected from a sample of companies included in the Refinitiv Eikon Database and analysed using a panel data analysis at both regional and industry level. The sample is composed of 228 European Companies, covering a period of 4 years, from 2019-2022. I chose this because it includes the impact of the pandemic and the post-pandemic recovery period, providing insight into the adaptability and resilience of companies in the face of major economic challenges.This research contributes to a deeper understanding of the dynamics between corporate governance, ESG practices and financial performance, providing valuable insights for investors, managers and regulators aiming to navigate sustainable investment strategies in the European market. This sample is considered large enough to provide meaningful data and draw relevant conclusions. Companies from various European countries were included to reflect the diversity of the market and to analyse variations in governance and ESG practices in different national contexts. The focus on public holding companies provides a specific perspective on how these entities manage corporate governance and ESG, given their importance in the European economy. The selection of the sample was based on the availability of financial and corporate governance data to ensure the reliability and validity of the analysis. This data will be used to investigate how governance and ESG practices influence companies' financial performance, thus providing important insights for understanding the relationship between these aspects within the European market.

Does Corporate Governance Moderate the Relationship Between Earnings Management and Financial Performance?

Motivation: This study aims to fill the gap in the corporate governance literature by examining the moderating role of corporate governance on earnings management and financial performance. Idea: The research is conducted in the light of agency and legitimacy theories, looking through how corporate governance practices moderate the relationship between earnings management and financial performance. Data: The database consists of an international sample of non-financial companies, for the time frame between 2020 and 2023. The data are collected from Thomson Reuters Eikon, and the analysed period responds to a thorough approach of the topic under problematic circumstances. In line with prior literature, this analysis includes several corporate governance mechanisms such as number of board meetings, board gender diversity, board size, CEO duality, independent board members, and audit committee independence. Among the control variables could be mentioned firm size, financial leverage, and profit or loss. Corporate governance is examined as a key driver in achieving financial performance, maximising the value created by companies and strengthening their connections with stakeholders. Tools: To test the research hypotheses, investigation is performed through frequency and descriptive statistics, parametric correlations, complemented with panel regression analysis with random effects performed in STATA 18 software. Findings: According to the results, there is strong evidence that financial performance is impacted by earnings management, at the corporate level. Notably, the main findings suggest that board meetings, board size, and board independence may be underlying factors in reducing the adverse effects of earnings management reflected in financial performance. Likewise, corporate governance may contribute to an effective monitoring of earnings management. Muchmore, the findings are in line with the agency theory, which asserts that corporate governance practices lessen managerial resource exploitation necessary for sustainable development and financial performance. Contribution: Relevance of the study resides in grounding a comprehensive overview in the earnings management and sustainability literature, examining corporate governance patterns. This research contributes to the debate of influence exerted by earnings management practices on financial performance extended towards a better understanding of corporate governance outcomes.

The impact of eco-innovation on companies’ financial performance: an analysis of key contributions and trends in the literature

Purpose This study aims to present a bibliometric analysis combined with a systematic review of the empirical literature to verify whether the relationship between the impact of eco-innovation and the financial performance of companies is corroborated. Design/methodology/approach This study uses bibliometric analysis and systematic review methods on 122 articles from Web of Science, Scopus and Science Direct, combining quantitative frequency and co-citation analysis with a qualitative exploration of themes in eco-innovation research. Findings In their research on eco-innovation, the authors found that there is a need to better understand the impact of eco-innovation on companies’ financial performance in the knowledge gaps. Research limitations/implications Research on eco-innovation identifies knowledge gaps and directions for future studies exploring environmental strategies to boost corporate commitment to sustainability. Originality/value This study finds that eco-innovation is decisive for enhancing operational performance and understanding its effect on companies’ financial outcomes, offering perspectives on how environmental practices influence organizational finance.

The Influence of Firm Characteristics and Macroeconomic Factors on Financial Performance: Evidence from the Portuguese Hotel Industry

This study examines the determinants of the financial performance of the Portuguese hotel industry. Despite the economic relevance of the hotel industry and financial performance as an indicator of business survival, academic research on the factors that influence it in the context of this industry, particularly in Portugal, is not extensive. This study encompassed a sample of 738 hotel companies from 2016 to 2021, using data from the Orbis database. This research was based on the assumption that a company’s size, liquidity, the tangibility of its assets, and debt level influence financial performance in the hotel industry, as well as the assumption that gross domestic product and consumer sentiment also affect the business success of hotel companies. By applying a panel data methodology, the findings indicate that all variables showed significant influence on financial performance, except liquidity. The analysis also reveals that smaller companies were more negatively affected by the demand decline induced by the COVID-19 pandemic. To improve the financial performance of the Portuguese hotel industry, the findings suggest that policymakers must work towards ensuring diversified sources of financing for the hotel business, such as investment subsidies, so that companies can minimize debt, especially during periods of slow economic growth. Additionally, companies must promote management strategies that enhance self-financing. Both measures could help companies increase their size, taking advantage of good business opportunities to explore economies of scale.

Does Intellectual Capital Influence Firm's Financial Performance in Bangladesh?

This paper aimed to find the effects of intellectual capital and its components on firms’ financial performance in Bangladesh. A sample of 100 firms comprised of 48 manufacturing, 21 services, and 31 banking companies was studied for five years from 2017 to 2021, setting 500 firm-year observations. Data was collected purposively from secondary sources, such as annual reports of sampled companies. The robust fixed-effect regression model using STATA 14.2 software was applied to test the hypothesis due to autocorrelation and heteroscedasticity problems. The regression results documented that overall IC, human capital efficiency (HCE), and capital employed efficiency (CEE) positively and significantly enhanced the ROA and ROE of the firms. However, structural capital efficiency (SCE) and relational capital efficiency (RCE) negatively and insignificantly influenced the same. The study contributes to resource-based theory using econometric methods to extend the samples of both financial and non-financial companies. This study helps investors, managers, policy-makers, governments, and accounting regulatory bodies regarding the utilization pattern of invisible and tangible resources in Bangladeshi firms.

The catalytic effect of digitalization and health measures during COVID-19 on corporate social responsibility in the African context

Purpose This study aims to examine the effect of digitalization and sanitary measures during the COVID-19 pandemic on corporate social responsibility (CSR) in the African context. While CSR has traditionally been analyzed in developed markets, this paper explores how multinational subsidiaries can leverage CSR practices to create financial opportunities and market stability for themselves and their communities in Africa. Design/methodology/approach The authors use a panel of data from six listed African companies for the period ranking from January 2006–2022 to analyze the effect of financial performance (FP), digitalization and health measures on the social responsibility of these companies. The authors provide a robust test that improves the understanding of the impact of pandemics and innovation on CSR, using Machine Learning (ML) linear regression. Findings The results show that the social responsibility of African companies is highly dependent on FP and digitalization. On the other hand, the authors demonstrate that the moderating role of epidemic instability negatively affects social responsibility through FP, but on the other hand strengthens CSR in the presence of digitalization. The results of the initial analysis remain largely unchanged, demonstrating the validity and robustness of the empirical results through ML models. This article highlights some of the obstacles and opportunities for CSR adapted to the crisis context. The authors conclude that adjusting innovation strategies improves the forecasting performance of responsible companies, especially in a context of instability. Research limitations/implications The paper clearly shows that CSR literature varies across different regions. Given that the financial market in Africa is characterized by a lack of opportunity for innovation as well as financial stability, this paper represents an important first step in the elaboration of a CSR development strategy. In light of the results presented above, the study makes an important contribution to the literature on CSR, in particular the CSR practices of multinationals in developing countries and also provides CSR managers with various insights into the types of support they will need to leverage and improve the internal underpinnings of their CSR strategies and collaboration. Practical implications The results of this study contribute to the understanding of digital transformation in responsible business, offering empirical evidence of its benefits in tackling the health crisis. In addition, the study highlights the role of an innovative approach in enhancing reputation and developing sustainable, trusting relationships with stakeholders. Originality/value This research pioneers the academic link between innovation and epidemic crisis in responsible business, filling a notable gap and introducing a new academic perspective. In concrete terms, it provides women entrepreneurs with actionable insights into the digital strategies essential to improving business performance in a context of instability. Methodologically, the study sets a benchmark for research innovation, using ML to provide a reproducible model for exposing robust results and for future research in this evolving field.

Rethinking the Role of Knowledge Sharing on Organizational Performance in Knowledge-Intensive Business Services

AbstractWhen implementing the knowledge-based view on organizations, it is crucial to have a comprehensive understanding of the organizational performance. Current research on organizational performance is often fragmented into partial facets leaving the complexity of this domain out of picture. The aim of the paper is to examine the relationship between knowledge sharing and organizational performance, comprising innovativeness, market efficiency, and financial performance. We used partial least squares structural equation modelling on profit-oriented organizations in knowledge-intensive business services (KIBS). The sample consists of 237 observations based on a two-round questionnaire survey, which was distributed to randomly selected companies in the Czech Republic. The results suggest that knowledge sharing between managers and employees enhances organizational performance. Organizations with such kind of knowledge sharing nurture both horizontal and vertical information flow, which in turn fosters innovativeness. Sharing knowledge as a part of work duties are key activities to increase market efficiency and innovativeness. Conversely, the model indicates that despite developing collectivism through sharing best practices and feedback, there is a minimal impact of knowledge sharing on financial performance.

Analisis Rasio Profitabilitas Sebagai Alat untuk Mengukur Kinerja Keuangan pada PT Fast Food Indonesia Tbk yang Terdaftar di Bursa Efek Indonesia

This aims to determine the profitability ratio to measure financial performance at PT Fast Food Indonesia. This research uses quantitative methods and focuses on finding out how Profitability ratios measure financial performance at PT Fast Food Indonesia Tbk from 2019 to 2023. Based on the results of research that has been carried out using profitability ratio calculations, namely Net Profit Margin, Return On Assets, and Return On It is known that Equity at PT Fast Food Indonesia Tbk experiences fluctuations every year except 2023. So it is concluded that the company's financial performance after being calculated using these three indicators is still below the industry average standard except in 2023 capable of being above industry standards.

SPEED OF ADJUSTMENT OF CAPITAL STRUCTURE IN LISTED COMPANIES ON THE INDONESIA STOCK EXCHANGE

This study aims to analyze the speed of adjustment of capital structure in companies listed on the Indonesia Stock Exchange (BEI) by considering key variables such as SoA, Distance, Profitability (RoA), Growth, and Tangibility. SoA refers to the speed at which companies adjust to their target capital structure, and the results indicate that companies in Indonesia have not yet reached an optimal capital structure target. Distance reflects the difference between the actual and target capital structure, while profitability reflects the financial performance of the company. Growth and Tangibility refer to company growth and the level of tangible assets that can be pledged as collateral. This study involved 717 companies listed on the BEI from 2020 to 2022, with 2020 as the estimation period and 2021-2022 as the research period. The One Sample t-test with a test value of 1 and multiple linear regression analysis with classical assumption testing were employed to examine the relationship between these variables and SoA. Each variable that has been used in this study shows that the speed of adjustment of capital structure in companies listed on the Indonesia Stock Exchange is not at the optimal target. Of the five hypotheses made, it turns out that only three hypotheses were accepted while the other two hypotheses were rejected.

Corporate social responsibility and firm performance: Evidence from Korea

ABSTRACT This study explores the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP) in listed Korean companies over ten years. The results show a significant positive effect of CSR on CFP in the manufacturing sector, but no notable impact in the non-manufacturing sector. A detailed analysis identifies social contribution as the key driver of this positive effect, while the other CSR sub-categories play a minor role. Higher ownership by majority shareholders and treasury stock is associated with lower CSR. This research enhances understanding of the CSR-CFP link in Korea, offering valuable insights for insiders and investors in decision-making.

COVID-19 and Market Response: Evidence From Listed Firms in Tanzania and Kenya

This study investigates the effects of COVID-19 on the financial performance of listed firms in the financial and consumer goods industries in Tanzania and Kenya. The choice of Tanzania and Kenya as focal points is motivated by their contrasting responses to the pandemic and their roles as economic powerhouses in the region. Using data from the Dar es Salaam Stock Exchange and Nairobi Stock Exchange spanning the period from 2015 to 2022, the study employs the Dynamic panel-data model, the two-step system GMM, to quantify the impact of the pandemic. The research has two specific objectives: to analyze the effect of COVID-19 on the financial performance of listed firms in the financial industry and to assess its impact on the consumer goods industry in both countries. Key findings reveal that in the financial sector, firms showed resilience with a positive impact on profitability during the pandemic, driven by the adoption of digital financial services and effective risk management. In contrast, the consumer goods sector experienced a significant negative impact, highlighting severe disruptions in supply chains and consumer demand. Notably, firms in Tanzania outperformed those in Kenya, due to less restrictive COVID-19 measures. These findings suggest policymakers should support digital innovations, prudent leveraging, and economic growth to sustain and improve firm profitability during future disruptions.