Financial Performance Of Indian Companies Research Articles

The Influence of Information Security Management System Implementation on the Financial Performance of Indian Companies: Examining the Moderating Effect of National Culture

The extensive focus on information technology (IT) within organizations, along with the substantial significance of information security issues, has made information security a top priority for executives. The International Organization for Standardization 27001 (ISO-27001) policy outlines the requirements for an effective Information Security Management System (ISMS). Implementing an ISMS not only enhances the overall profitability of a firm, but it also has a significant impact in various scenarios. In this study, we examined how ISMS implementation can assist corporations financially, with a specific focus on the moderating effect of Indian national culture. We analyzed financial performance following ISMS and ISO-27001 implementation using sample data from 420 Indian small and medium-sized enterprises (SMEs). By analyzing 256 survey questionnaires from 420 SMEs, we found that national culture amplifies the strong interaction between ISMS implementation and SME performance in India. We found that ISMS implementation increased the profitability of recognized Indian firms, supporting study hypotheses. The findings provide valuable insights for SMEs seeking to enhance financial performance through ISMS implementation, emphasizing the moderating role of national culture in shaping these outcomes.

Exploring the Influence of Sustainability Reporting on Indian Corporate Financial Performance: A Meta-Analytical Synthesis

This research paper delves into the burgeoning field of sustainability reporting and its influence on the financial performance of Indian corporations, a topic of increasing significance in the evolving global business landscape. The primary objective of this study is to examine the extent to which sustainability reporting correlates with the financial performance of Indian companies, and to understand the nature and strength of this relationship. A meta-analytical approach was adopted to synthesize findings from diverse studies, providing a comprehensive overview of existing literature on the subject. This methodology involved rigorous inclusion and exclusion criteria, a systematic search across major academic databases, and the application of statistical techniques to calculate effect sizes and assess heterogeneity. The key findings indicate a positive, albeit modest, correlation between sustainability reporting and financial performance, as evidenced by an overall effect size (r) of 0.11. This outcome points to the importance of integrating sustainability practices into business strategies, not just as a compliance or ethical imperative but as a potential contributor to financial success. The study’s findings vary across different industries, with the banking sector showing a more significant relationship compared to non-financial firms. The implications of this research are multifaceted, influencing corporate strategy, policy formulation, and investment decisions. It underscores the strategic value of sustainability reporting in the Indian corporate sector and highlights its role in shaping a business approach that harmonizes economic prosperity with environmental and social responsibility. This study contributes to the broader understanding of the interplay between sustainability and financial performance, offering valuable insights for businesses, policymakers, and stakeholders in the rapidly evolving Indian corporate landscape.

Is There Any Impact of CSR on Financial Performance? Evidence from Indian Firms

The sceptical attitude towards linking corporate social responsibility (CSR) and corporate financial performance (CFP) forms the basis of this study. The available literature concentrates only on the positive side of CSR activities and benefits derived from them. The Companies Act, 2013, has made it mandatory for Indian companies of a certain turnover and profit to use 2% of their profits from the past three years on CSR activities. Given this background, this study examines the impact of CSR on the financial performance of the business itself. The economic legitimacy of CSR is also probed, that is, does CSR have a positive economic impact? For this examination, the Pearson Fixed effects panel regression analysis was performed on Nifty 50 companies during the period 2010–2018. Data regarding financial performance variables was obtained from Prowess IQ database. The CSR data was collected from the companies’ annual reports and content analysis was done using NVIVO software. The results of the study provide insights into the corporate response to the mandatory requirement of CSR activities and their impact on the company’s financial performance. The results of the study conclude that there is no significant influence of CSR on the financial performance of Indian companies.

The impact of integrated reporting on financial performance in India: a panel data analysis

PurposeThe study aims to determine the trend of Integrated Reporting (IR) practices and investigates its impact on operational performance (return on assets (ROA)) and firm value (Tobin's Q) of National Stock Exchange (NSE) listed companies in India.Design/methodology/approachManual content analysis is used to construct Integrated Reporting Disclosure Quality Index (IRDQI) to assess disclosure practices of 93 integrated annual reports for three years from 2017–2018 to 2019–2020. Further, panel data models are utilized for investigating the relationship between IRDQI and financial performance. The dependent variable consists of ROA and Tobin's Q in regression models, while the independent variable includes IRDQI.FindingsThe empirical analysis results show that IRDQI is positively and significantly associated with operational performance (ROA) while insignificantly related to firm value (Tobin's Q). The study also reveals the upward trend of IR elements and guiding principles from 2017–2018 to 2019–2020.Research limitations/implicationsThe primary limitation of this study is the scarcity of data as a handful of companies are preparing IR in India. This paper considers two profitability measures, i.e. ROA and Tobin's Q. Future research should consider both long-term and short-term profitability measures to represent the progress of IR in India.Practical implicationsThe escalation of IR disclosures represents that Indian companies are utilizing the opportunities offered by IR to meet stakeholders' expectations. Further, the study investigates the financial performance of Indian companies, which is essential for the growth and survival of the companies. The study's findings would enhance the capacity of firms to raise capital from capital markets by enticing investors.Originality/valueThis study contributes to the limited literature of IR disclosure and financial performance in India by employing content analysis and regression analysis. The organizations could utilize the unique IR index constructed in the Indian context to scrutinize their IR practices.

Examining the Impact of Corporate Social Responsibility on the Financial Performance of Indian Companies

Corporates play a vital role in the economy and are subject to growing expectations from stakeholders. Therefore, it is essential to understand the financial impact of corporate social responsibility (CSR) on corporates’ activities. This article examines the impact of CSR on 30 Bombay Stock Exchange (BSE)-listed corporate efficiencies by using multi-criteria decision-making models. The article emphasized the technical efficiency of 30 BSE-listed corporates and explored high-efficiency drivers. This study applies multiple methods, that is, data envelopment analysis and free disposal hull, to observe the efficiency rankings of the 30 BSE Index-listed companies for 6 years, that is, 2014–2020. In the second stage, we perform truncated regression analysis to validate our results on the association between CSR and the financial performance of the corporate. The findings suggest that 6 out of 30 corporates are technically efficient (TE = 1) in all frontier approaches. Furthermore, the outcomes portray those three pillars of CSR (i.e., environment, social and governance) are positively correlated with efficiency. Furthermore, it has also been observed that environment and social scores are positively related to return on assets. The findings can be helpful for the stakeholders, policymakers and management of the corporate as a guideline to implement CSR practices.

Corporate social responsibility and financial performance in selected companies of India: an event study approach

The present study examines the impact of corporate social responsibility (CSR) on financial performance of Indian companies. The proxies for the CSR and financial performance are sustainability award announced by Confederation of Indian Industry (CII-ITC) and stock price. The study is based on the 32 companies awarded by CII-ITC Sustainability Award during 2010-2011 to 2016-2017. After collecting the data of stock price of entire sample companies, an event study methodology has been applied to observe the impact of corporate social responsibility on abnormal return in window period -40 days to +40 days considering window estimation period 200 days. The results reveal insignificant relationship between CSR and financial performance during pre and post announcement of sustainability award.

The Indian Corporate Board Efficiency and its Impact on Financial Performance

The objective of the study is to explore the board characteristics and its impact on the financial performance of Indian companies. The sample comprises of top 100 companies listed on the Bombay Stock Exchange for the financial year 2018-2019. The data required for the analysis was collected from the annual reports of the companies available at their respective websites and from the Prowess database of the Centre for Monitoring of Indian Economy. The paper constructed sub-indices for the board as board composition index, board independence index and board disclosure index. Combining all sub-indices, we formed the Board Composite Index. Further, the data was analysed to draw meaningful conclusions. Firm size is used as a controlling variable. The results show that there is a strong relationship between board indicators and return on asset.

A Study of the Impact of Merger and Acquisition on Financial Performance of Indian Companies

The objective of this research to determine the effects of mergers and acquisitions on the financial performance of Indian acquiring company. Over the years, mergers and acquisitions have been the most widely used strategy for inorganic business expansion. It is frequently used to restructure companies. Companies engage in mergers and acquisitions for strategic business reasons, which are mostly financial in nature. This study makes an effort to assess the effects of the acquiring company's financial performance pre and post the acquisition. The performance of the companies was compared before and after the merger to see if there was any impact on their financial performance. This was done using a descriptive research approach. The acquirer company in selected M & A deals in India in periods 2016-2017 (As there is impact of Covid-19 in 2020) using select financial ratios and paired t test at 5% significance.

Nexus between intellectual capital and business performance: evidence from India

PurposeThe prime intention of this study is to examine the influence of intellectual capital (IC) on the financial performance of Indian companies listed on Standard and Poor Bombay Stock Exchange Sensitive Index (BSE SENSEX).Design/methodology/approachThe study employs the data of 30 most significant and most prominent companies of India listed on BSE SENSEX for 10 years from 2009–2010 to 2018–2019. Value Added Intellectual Coefficient (VAICTM) methodology developed by Pulic (2000) was employed for measuring the efficiency of the IC.FindingsThe efficiency of IC is substantially and positively associated with the financial performance of the Indian companies as measured by return on assets (ROA), market-to-book (MB) ratio and return on equity (ROE). Amongst the three dimensions of VAIC, capital employed efficiency (CEE) was the most vital element in contributing to the firm financial performance, followed by human capital efficiency (HCE). Structural capital efficiency (SCE) only helps in enhancing the ROA of Indian firms.Research limitations/implicationsThe study results are only restricted to the 30 companies of India listed on S&P BSE SENSEX Index. Thus generalization of the result needs especial caution.Originality/valueThe study fills the void in the current literature of IC and business performance and extends the understanding of their relationship by providing empirical evidence.

Limiting role of resource dependence: an examination of director interlocks, board meetings and family ownership

PurposeThis paper attempts to examine the activity and involvement of board of directors in internationalization activities of firms in emerging markets, by evaluating the resource provisioning roles of interlocks provided by board of directors, and the frequency of board meetings. We demonstrate that the effectiveness of board involvement is contingent upon the levels of family ownership in firms since family ownership could impact the firm’s ability to utilize the presence of different types of board members.Design/methodology/approachThe authors test our hypotheses on a sample of listed Indian companies, extracted from the Prowess database published by the Centre for Monitoring Indian Economy (CMIE), a database of the financial performance of Indian companies. On a panel of 3,133 firm years of 605 unique Indian firms with foreign investments, over a time period of 2006–2017, the authors apply different estimation techniques.FindingsThe results demonstrate that both board meeting frequency and director interlocks are instrumental in supporting internationalization activities in emerging market firms. However, family ownership moderates the role of insider and independent interlocks on internationalization investments in different ways; the authors find that interlocks provided by independent directors support internationalization activities in family firms, whereas those provided by insider directors do not. Further, the study also finds that board meetings are less effective in internationalization of family firms.Practical implicationsThe authors conclude that family firms aiming at international diversification require to develop more connected and networked independent directors to enable internationalization in firms. While independent director interlocks enhance the international investments, it is also useful to know that board meetings are ineffective in utilizing the resources in family firms. This points to the possibility that family firms should device mechanisms to integrate family meetings with board meetings so that they can utilize the within-family processes to aid in their internationalization decisions.Originality/valueThe study contributes to resource dependence theory by understanding its limiting role in family firms. Theoretically, it helps delineate the limiting resource provision role of the insider directors vis-à-vis independent directors. The authors argue that the resource provision role of insider director interlocks does not effectively help in internationalization in comparison to independent director interlocks in family-dominated firms. Consequently, the study shows the limiting role of resource provision and utilization by family-owned firms in comparison to non-family-owned firms.

Does Corporate Social Responsibility Affect the Financial Performance of the Manufacturing Sector? Evidence from an Emerging Economy

The present study analyzed the impact of corporate social responsibility (CSR) reporting on the financial performance of Indian companies. It used secondary data from 50 manufacturing companies over the period of fiscal years 2011 to 2017. The results suggested that there exists a significant relationship between the performance of Indian companies and their CSR. The CSR not only improves the firm’s social value and reputation but also improves profitability and performance. According to the results, return on assets is significantly determined by corporate governance, customers, products, number of employees, and board size. The customer has a negative impact on return on assets (ROA). The relationship between return on equity and independent variables is the same as the relationship between ROA and independent variables. Corporate governance and product positively impact ROE, but the relationship between customers, number of employees, and board size are negative. Corporate governance and product positively impact return on capital employed (ROCE), but the relationship between customer and the number of employees is negative. Education has positive impact on profit after tax (PAT) and profit before tax (PBT), but the PAT relationship between environments is negative. Corporate governance and product positively impact PBT. In general, we concluded that in India, socially responsible corporations perform better and vice versa.

Corporate Sustainability Performance and Financial Performance of Indian Companies: A Relational Study

In the world of ever changing expectations, companies must account for the way they impact the communities and environments where they operate. Businesses can sustain their growth only if society is generally satisfied with their overall contribution to societal well-being. During last few decades the concept of Sustainable Development (SD) has established itself as an important concept not only at global level but also at corporate level. The objective of this paper is to find out relationship between Corporate Sustainability Performance and the Corporate Financial Performance (FP) of some selected Indian companies. We analyse the impact of sustainability performance components (community involvement, natural environment, employees, governance and consumers) on

Does Environment Sensitivity Pay? An Empirical Study of Indian Companies

Less polluting firms that employ green processes and follow better environmental policies have become preferred mode of investment asset class. The concern of businesses on environment is continuously being reflected in the long term focus and strategic planning. The primary aim of the present paper is to examine the relationship between environmental performance and financial performance of Indian companies that have been rated under Green Rating Project of Centre for Science and Environment from FY 2011 to FY 2015. The environmental performance is measured in terms of the ratings provided under the Green Rating Project while the financial performance is measured in terms of net profit margin. Regression analysis is performed on the data and the results show that higher score on the green index has a positive effect on financial performance for automobile and caustic chlorine and cement sectors. Also the firm's sensitivity towards the environment leads to better management of costs and lower monitoring costs, thereby increasing profits.

Board Structure and Firm Performance: Evidence from India's Top Companies

ABSTRACTManuscript Type: EmpiricalResearch Question/Issue: This paper investigates the relationship between internal governance structures and financial performance of Indian companies. The effectiveness of boards of directors, including board composition, board size, and aspects of board leadership including duality and board busyness are addressed in the Indian context using two theories of corporate governance: agency theory and resource dependency theory.Research Findings/Insights: The study used a sample of top Indian companies taking into account the endogeneity of the relationships among corporate governance, corporate performance, and corporate capital structure. The study provides some support for aspects of agency theory as a greater proportion of outside directors on boards were associated with improved firm performance. The notion of separating leadership roles in a manner consistent with agency theory was not supported. For instance, the notion that powerful CEOs (duality role, CEO being the promoter, and CEO being the only board manager) have a detrimental effect on performance was not supported. There was some support for resource dependency theory. The findings suggest that larger board size has a positive impact on performance thus supporting the view that greater exposure to the external environment improves access to various resources and thus positively impacts on performance. The study however failed to support the resource dependency theory in terms of the association between frequency of board meetings and performance. Similarly the results showed that outside directors with multiple appointments appeared to have a negative effect on performance, suggesting that “busyness” did not add value in terms of networks and enhancement of resource accessibility.Theoretical/Academic Implications: The two theories of corporate governance, namely agency and resource dependence theory, were each only partially supported, by the findings of this study. The findings add further to the view that no single theory explains the nexus between corporate governance and performance.Practitioner/Policy Implications: This study demonstrates that corporate governance measures utilized in developed economies related to boards of directors have some synergies and relevance to emerging economies, such as India. However, the nature of business structures in India, for example the large number of family businesses, may limit the generalizability of the findings and signals the need for further investigation of these businesses. The evidence related to multiple appointments of directors suggests that there may be support for restricting the number of directorships held by any one individual in emerging economies, given that the “busyness” of directors was negatively associated with firm performance.