Operating Performance Of Firms Research Articles

Rookie directors and dividend payouts: Evidence from China

This study examines the nexus between rookie independent directors and corporate dividend payouts among Chinese A-share firms between 2006 and 2020. The empirical results imply that rookie independent directors lead to enhanced corporate dividend payouts. This positive association is less pronounced in the presence of strong governance factors such as foreign ownership, Big-4 auditors, and higher analyst coverage. We identify that firm operating performance can work as a channel in the nexus mentioned above. Lastly, in light of our findings, we recommend that policymakers and shareholders in China should give adequate attention to rookie independent directors since they guard the interests of shareholders by efficiently and effectively monitoring corporate management.

Reverse logistics practices and operational performance of firms in the manufacturing sector: A systematic review

Reverse logistics practices and operational performance of firms in the manufacturing sector: A systematic review

Short-term credit policies and operating performance

AbstractUsing a sample of United Kingdom (UK) non-financial firms from 2009 to 2021, this paper examines the operating performance effect of aggressive and moderate use of trade payables and bank credit. The results demonstrate a hierarchical effect of the use of short-term credit on firms operating performance. In particular, the results show that aggressive use of bank credit achieves higher operating performance, followed by moderate use of trade payables and bank credit and then aggressive use of trade payables. We further document that operating performance of firms dealing in differentiated products, lower firm size, firms with higher market power and financially stable firms’ increases with aggressive and moderate use of trade payables and bank credit. Overall, the results indicate that firm operating performance is an increasing function of bank credit use and demonstrate the importance of short-term credit policies on firms’ operating performance. The results are robust after using a novel approach in addressing the issue of endogeneity.

Current Assets Management and Operational Performance of Consumer Goods Firms in Nigeria

The study examined the effect of current assets management on the operational performance of firms in the consumer goods Industry in Nigeria. Specifically, the study ascertained the effect of inventory turnover, accounts receivable turnover, and cash conversion cycle on the turnover of consumer goods firms in Nigeria. The study adopted an ex-post-facto research design, covering a ten-year period (2013 to 2022). Secondary data were extracted from the annual reports and accounts of sampled FMCGs in Nigeria. Multiple regression techniques were used for test of hypotheses. The findings of the study reveal several important insights. Firstly, the analysis indicates a statistically significant negative relationship between inventory turnover and the turnover of FMCG firms in Nigeria. This is evident from the t-statistic of -2.269713 and a corresponding p-value of 0.0255. Secondly, in contrast, the study shows that accounts receivable turnover has a statistically non-significant negative impact on the turnover of FMCG firms in Nigeria. This is evidenced by a t-statistic of -0.406028 and a p-value of 0.6856. Lastly, the research demonstrates a statistically significant effect of the cash conversion cycle on the turnover of FMCG firms in Nigeria. This is supported by a t-statistic of -3.299741 and a p-value of 0.0014. The findings of the study lead to several recommendations for FMCG firms in Nigeria. Firstly, it is advised that firms enhance their demand forecasting techniques and adopt agile replenishment strategies to align with market trends and consumer preferences. Leveraging technology and data analytics can optimize inventory levels, mitigating overstocking and stockouts. Secondly, firms should tailor credit terms based on customer credit profiles, establish clear credit policies, and implement effective collections processes supported by technology. Lastly, it's recommended that firms conduct a comprehensive analysis of their operational cycle, collaborate closely with suppliers, and integrate technology to streamline processes.

Examining the Effect of Supply Chain Management Practices and Supply Chain Integration on Firm Operational Performance: A Practice-Based View Perspective

Examining the Effect of Supply Chain Management Practices and Supply Chain Integration on Firm Operational Performance: A Practice-Based View Perspective

External environment and internal dynamics of “born global”: strategic and operational firm performance

Purpose“Born global firms” are those organizations which, from their inception and by nature, adopt an essentially global-scale entrepreneurial functional and attitudinal strategy for growth. They seek to gain significant competitive advantage by utilizing their internal resources while leveraging external environment potentialities, to sell their outputs internationally. The aim of this research is to investigate the influence of the external business environment and the dynamic capabilities of born global firms, on their strategic and operational performance, as well as the role of leadership vision on their internationalization performance.Design/methodology/approachInitially and resting on extant literature with pertinent foci, including the absorptive capacity and the dynamic capability view theories, a conceptual model is proposed. Subsequently, the model is validated through the partial least square structural equation modeling technique, based on 417 respondents from Indian firms.FindingsThe study concludes that the external business environment and internal dynamic capabilities of born global firms have a significant and positive impact on their strategic, as well as operational performance; with leadership vision playing a significant moderating role to this relationship. The study finally presents the executive implications of the findings and identifies the avenues for further scientific research.Originality/valueThis is a unique study on the topic, both in relation to resources/capabilities versus performance and with regards to the leadership vision's role. It moreover focuses on a primary business force, India, which comprises prime examples of global entrepreneurship. The research constituting a significant contribution to knowledge, as research on how small firms can strategically grow so rapidly and effectively, is still far from conclusive, particularly under the present evolutions that incessantly redefine the contextual business forces upon which strategy is drawn.

The Obstacles to the Growth of the Renewable Energy Industry in the European Union

The study presents a comparative analysis of the financial standing of renewable- and conventional-energy-generating companies domiciled in the European Union, and explores factors contributing to their operating performance and financing needs. The comparative analysis of electricity-generating companies demonstrates that renewable energy providers have steadily improved their financial standing and appear well-prepared to compete with conventional energy generation from fossil fuels. Relying on univariate statistical tests, we demonstrate that, at present, renewable energy companies generate a significantly higher return on assets and make larger investment outlays than their conventional peers. Univariate cross-sectional tests confirm that they also enjoy access to cheaper equity and more plentiful debt financing thanks to a shift in the priorities of financial institutions and capital markets. We posit that, besides the cumbersome permit system, the biggest challenge to the operating performance of renewable energy firms could reside in the restrictive revenue caps, price regulation, and renewable firms’ exposure to spot market price fluctuations. The econometric analysis based on multivariate panel regression models demonstrates that the profitability and financing needs of renewable energy companies are more sensitive to electricity prices than those of conventional energy firms. We conclude that higher energy prices and greater reliance on market pricing mechanisms could significantly boost the performance of the renewable energy sector.

Impacts of Free Cash Flow and Agency Cost on Firm Performance

This study aims to examine the effect of free cash flow and agency cost to firm performance. The purpose of this study to provide empirically evidence about the effect of free cash flow and agency cost to firm performance. This study also examines the free cash flow hypothesis developed by Jensen (1986). Recent study about this topic resulting mixed/various result. Free cash flow in this study measured by free cash flow t-1, agency cost proxied by operating expenses ratio. Firm performance divided into three, operational performance measured by ROA, firm value measured by tobin's q ratio, and share return measured by holding period return. This study will conduct on manufacturing companies listed on Indonesian Stock Exchange period of 2017-2021. Sample were selected by purposive random sampling method and finally obtained 396 samples that fulfill the criteria. Data were analyzed using multiple regression analysis. The result show that free cash flow has insignificant positive effect on firm operational performance, firm value and share return. Agency cost has significant negative effect on firm operational performance, firm value and share return. This study provides empirical evidence of the effect agency cost on firm performance and provides contribution to the literature on free cash flow hypothesis topics

Corporate Overheads and Operational Performance of Brewing Firms in Nigeria

The study examined the effect of corporate overheard on the operational performance of firms in the Brewing Industry in Nigeria. The specific objectives of the study were to ascertain the effect of sales and marketing expenses, administrative expenses, and company income tax expenses on earnings per share of breweries in Nigeria. The study adopted an ex-post-facto research design, covering the period between 2015 and 2022. Secondary data were extracted from the annual reports and accounts of sampled breweries in Nigeria. Multiple regression techniques were used for test of hypotheses. The findings of the study indicate that sales and marketing expenses, administrative expenses, and company income tax expenses do not have a statistically significant effect on the earnings per share of breweries in Nigeria. These non-significant relationships suggest that variations in these expenses do not significantly impact the profitability and financial performance of breweries in terms of their earnings per share. These findings highlight the need for further exploration of other factors that may influence profitability in the brewing industry in Nigeria. The study therefore conclude that corporate overheads does not significantly affect operational performance of breweries in Nigeria. The implication of the finding is that there is a need for breweries in Nigeria to consider a broader range of factors beyond the studied expenses to enhance their profitability and operational performance. The study, therefore, recommends that breweries should consider incorporating additional financial performance indicators, such as return on assets, return on equity, and gross profit margin, to gain a comprehensive understanding of their financial performance and identify areas for improvement. In addition to financial indicators, breweries should focus on non-financial factors like product quality, customer satisfaction, brand reputation, and market share, as these can significantly impact profitability and overall competitiveness. Breweries should analyze all aspects of the value chain, including production, distribution, procurement, and overhead costs, to identify opportunities for cost optimization. Managing cost drivers effectively can improve cost efficiency and enhance financial performance.

Quality management practices and inventory management process: the contingency and institutional approach

PurposeWhereas the majority of research explores the direct relationship between quality management practices and firm operational performance using data on developed economies, this paper asserts that the effect of quality management practices on firm operational performance needs to be evaluated with reference to the contingency approach, especially in developing countries. Therefore, the authors empirically test whether competitive intensity moderates the relationship between quality management practices and inventory management process.Design/methodology/approachThe authors employ a fixed-effect model on data from more than 7,000 observations operating in 27 Eastern and Central European countries.FindingsThe findings reveal that the adoption of quality management practices decreases inventory days only in a highly competitive market. Additionally, the results indicate that this effect is changing when distinguishing between countries and sectors.Originality/valueThis study advances research on quality management practices by emphasizing the importance of contingency and institutional approach.

Customer Centricity and Firm Operational Performance: A Study of Fast Moving Consumer Goods’ Firms in Ogun State, Nigeria.

This study examines customers centricity and firm operational performance in Fast Moving Consumer Goods (FMCGs) in Ogun State, Nigeria. The study is premised on three customer-centric elements or dimensions: customer integration, internal integration, and external integration. A descriptive survey research design was employed in the study, using the maximum variance sampling technique. A structured questionnaire was administered on customers of selected FMCGs in Ogun State, Nigeria. Employing the Ordinary Least Squares (O.L.S) technique, the results revealed that customers' centricity significantly affects the operational performance of FMCGs in Nigeria. The findings also reveal that external integration and customers' integration are the most significant dimensions of customers' centricity. It is recommended that organisations should pay more attention to their customers' integration and external integration since these two dimensions are the most significant customers' centricity dimensions explaining FMCGs operational performance in Nigeria.

Digital resilience and new business models in the post-COVID-19 scenario: from B2B perspective in the era of knowledge economy

PurposeThe purpose of this study is to examine how the pandemic impacted on business-to-business (B2B) cooperation and coordination, as well as on firms' financial and operational performance, from the B2B context in the era of knowledge economy.Design/methodology/approachWith the help of social network theory, coordination theory and existing literature, a theoretical model was developed conceptually. Later, the conceptual model was validated using structural equation modelling technique with consideration of 712 respondents from different firms who are engaged in managing B2B relationships on behalf of their firms.FindingsThe study found that the COVID-19 pandemic has had a considerable moderating impact on the relationship between B2B cooperation and coordination with B2B relationship satisfaction. The study also highlighted that there is a degradation of financial and operational performance of firms due to the impact of COVID-19 pandemic on their B2B relationship management.Practical implicationsThere is a challenging and ever-evolving global economy caused by the COVID-19 pandemic. Although it is argued that the pandemic has accelerated the growth of some online firms, it has also had a catastrophic effect, culminating in many firms failing. This study has developed a new business model which helps in improving financial as well as operational performance of the firms in post COVID-19 scenario, especially in the era of knowledge economy.Originality/valueThis is a unique study as this study (1) develops a unique theoretical model with high explanative power, (2) demonstrates how digital reliance and new business model help the firms in post COVID-19 pandemic and (3) adds to the body of literature in the domain of digital reliance, knowledge economy and B2B relationship management.

Ownership structure and firm performance: evidence from Saudi Arabia

Purpose This study aims to examine the impact of ownership structure variables on the performance of Saudi listed firms. Design/methodology/approach The impact of ownership structure variables on firm performance is examined using fixed effects and dynamic panel generalised method of moments regression approaches for 70 listed firms over the period 2016–2021. Ownership structure variables are captured by examining government, institutional, insider, foreign and family ownership, and firm performance is gauged in terms of the accounting-based measures of return on assets and the return on equity and the market-based measures of Tobin’s Q and the market-to-book ratio. Findings The results show that government, institutional, insider and foreign ownership all positively affect both accounting and market-based performance measures, whereas family ownership exerts a negative impact across the models. The findings support resource dependence theory, agency theory and alignment effects arguments. Practical implications The findings have significant implications for Saudi regulators in their effort to improve domestic capital market efficiency and investor protection, while also highlighting the need for a corporate governance code to safeguard minority shareholders. The results demonstrate that government, institutional, insider and foreign ownership exert an important impact on firm operational and market performance. Originality/value This study expands the literature by examining how ownership structure variables affect performance in an interesting developing country corporate context.

Empirical investigation into impact of IT adoption on supply chain agility in fast food sector in Pakistan

Information technology and supply chain agility are in vogue. The present study aims to investigate the impact of information technology (IT) on supply chain agility and its outcomes such as cost reduction and operational performance in fast food companies’ chains. A total of 240 employees from fast food chains were selected as respondents. Data was collected using five-point Likert scale questionnaire developed from previous studies. The statistical results confirmed that adoption of IT is playing a vibrant role in achieving supply chain agility and supply chain agility helps to reduce cost and improves operational performance of firms. The study model provides a useful framework to examine the impact of IT adoption on supply chain agility and its outcomes. In conclusion, the firms have to focus on their supply chain management and make it efficient and agile by implementing the advanced technologies to gain operational performance. Implications have been discussed.

At the Frontier of Sustainable Finance: Impact Investing and the Financial Tradeoff; Evidence from Private Portfolio Companies in the United Kingdom

Drawing from the extremely novel impact investing landscape and the limited existing literature on the topic, it appears that investing in social enterprises should come at the cost of partially sacrificing financial returns to invested capital. This paper investigates the existence of this tradeoff by assessing how the performance of impact investing funds compares to that of traditional private equity and venture capital operators. Focusing on portfolio firm operating performance, we construct a dataset of 85 impact-investing observations and 5310 traditional observations over the period ranging from 2009 to 2020, in order to compare the performance of the traditional investor-backed firms with those of sustainable companies participated by social impact investors. Advanced matching methods such as Radius and Kernel matching suggest that the composition of the shareholding structure significantly affects the profitability of the company, with traditional firms outperforming their socially-concerned counterparts. Looking instead within the subsample of impact investor portfolio companies, and focusing only on the post-investment observations, we analyze how the percentage owned by the impact investors impacts the performance of the owned companies. The results show that, similarly to traditional ownership, a greater share controlled by impact investors leads to higher returns.

The more, the merrier: Performance effects of cash over the business cycle

This paper adds to the recent interest in the link between cash and firm performance, by studying how this relationship varies across boom- and bust cycles. We use data of Norwegian firms from a broad range of sectors in the period 2005–2015, and both replicate and extend previous findings on the relationship between cash and performance over the business cycle. We find that i) cash has a positive, but weakly diminishing effect on operational firm performance (ROA) throughout the entire sample period, and ii) that the curvilinear relationship between cash and firm performance is the most pronounced in the pre-recession years, while it is virtually linearly positive in recessions and post-recession periods. We conclude that cash indeed has an impact on firms’ operational performance, and especially so in recessionary times.

A decision making framework for comparing sales and operational performance of firms in emerging market

Sales and operations planning translates the requirements of the customers at the market place (related to new and/or existing products and services) into actionable tactical plans to drive the activities of the value chain of the organization. The present work aims to provide a multi-period and multi-perspective evaluation framework to compare the sales and operational performance (SOP) of firms in an emerging market. SOP is one of the frontline KPIs that describes the efficiency and effectiveness of the sales and operations planning. There is a scantiness in the extant literature about well-defined indicators to measure SOP. The current work fills the gap in the literature by developing a hybrid multi-criteria decision making (MCDM) framework utilizing the Logarithmic Percentage Change-driven Objective Weighting (LOPCOW) and Evaluation based on Distance from Average Solution (EDAS) models for a novel application in assessing SOP. From the data analysis, it is also evident that there is a variations in the year wise ranking of the companies. However, all individual year wise rankings maintain statistically significant correlations with the aggregated ranking. For aggregation purpose, Borda Count Method is used. The companies like ITC Limited, Hindustan Unilever Ltd., Avanti Feeds Ltd., Britannia Industries Ltd., and Symphony Ltd. hold the top five positions on aggregate. The comparison with other MCDM models is made and sensitivity analysis is carried out. The present work is a first of its kind that would encourage the analysts and the policy makers to evaluate the sales and operational performance using a scientific way.

Cash shortfalls in IPO firms

We find that most IPO firms will run out of cash soon if they did not receive proceeds from IPOs. The cash shortfalls are not caused by increases in capital expenditure, R&D, M&A, or debt repayment and persist during the 5 years after IPO. Negative net cash flows help explain the persistent cash shortfalls. These results are consistent with the funding horizon theory. IPO firms with more initial cash shortfalls also have lower cash flows in the next 5 years, suggesting that initial cash shortfalls can be used to predict the future operating performance of IPO firms.

Impact of credit default swaps on firms’ operational efficiency

As one of the most important financial innovations in the last two decades, credit default swap (CDS) contracts have been initiated and actively traded in the market to hedge against credit risks. However, little is known about how these financial innovations affect an underlying firm's operations. In this empirical study, we find that an underlying firm's operational efficiency is significantly improved with the inception of CDS trading. Our results are robust to multiple causal identification strategies. Further analysis suggests that the inception of CDS tends to enhance the operational efficiency of a firm through the supply chain financing capability and trade credit. We also postulate that CDS leads to enhanced efficiency through institutional monitoring and improvements in management effectiveness. We then obtain suggestive evidence. Our findings have direct implications concerning the ongoing policy debate surrounding CDS. We contribute to operations management research by exploring how innovations in the financial market would, in turn, affect the operational performance of firms.

Venture Capital Investments and the IPO performance of Chinese Firms

Purpose - The purpose of this study is to examine the effect of VC investment on the IPO and post-IPO performance of Chinese firms. Design/methodology/approach - By utilizing CSMAR and VentureXpert database, we construct a firm-year panel data covering all listed firms in the Chinese stock market from 2006 to 2018. Findings - First, we find that VC-backed firms are significantly less underpriced than non-VC-backed firms. Our results show that the initial IPO-day return of VC-backed firms is 0.16% lower than that of non-VC-backed firms. Next, we find that VC-backed firms demonstrate significantly worse operating performance than non-VC-backed firms after the IPO. In the next three years following the IPO, VC-backed firms underperform non-VC-backed firms by 0.4% in terms of ROA and by 0.6% in terms of ROE. Research implications or Originality - Our results support the Grandstanding Hypothesis, among several competing hypotheses regarding the effect of VC investment, which suggests that VCs window dress their IPO firms for their early exit at the expense of a poor operating performance of the IPO firms after going public.