Future Sales Growth Research Articles

Strategic planning, budget monitoring and growth optimism: evidence from Australian SMEs

PurposeGrowth optimism, which describes the expected future growth of a firm, is an important but underexplored construct in strategy. This paper aims to assess the planning antecedents of such growth optimism by using a large Australian sample of small enterprises.Design/methodology/approachThe authors use a secondary data set, gathered among Australian small to medium enterprises (SMEs), by the Australian Bureau of Statistics (ABS). The analysis adopts a regression approach including a mediated and a non-mediated path to explore the direct and indirect effects of strategic planning and budgetary planning and management on expected future revenues.FindingsThis paper assesses the implications of concurrent strategic planning and financial management dynamic capabilities on anticipated future revenue growth, an important predisposition dynamic capability. The authors note that this configuration of actions and predisposition aligns closely with the necessary requirements for growth. The findings suggest that firms that use strategic planning and robust budget planning and monitoring processes exhibit higher optimism about future sales growth and firms that effectively configure these planning activities with market development tend to exhibit higher growth and more growth optimism.Research limitations/implicationsIn terms of theoretical contributions, the paper strongly supports the formality view in the formal/informal debates associated with effectuation strategies. The authors suggest that appropriate strategic and budgetary planning and control systems act as a counterbalance to organisational confusion and managerial capriciousness, leading to improved confidence among managers and their employees regarding future resource commitments and plans.Practical implicationsThe findings of the paper are potentially important for both managers and policy makers. For managers seeking to grow their future sales, planning is shown to be an important antecedent activity. The presence of financial and strategic planning may predispose firms to make important investment decisions that drive future growth. Also, a better understanding of the firm’s current and future strategic and financial position may be evidence of effective firm management, a situation that, in turn, drives growth.Social implicationsIn terms of social and policy implications, the data gathered for the survey by the ABS forms a valuable collection of information in relation to business practices. Australian firms are required by law to regularly report budget plans and outcomes. The research suggests that this data can inform policy initiatives, particularly in relation to programmes that may assist small and young firms to undertake prospective strategic and budgetary planning.Originality/valueTo the best of the authors’ knowledge, this is the first paper to investigate the particular configuration of strategic and financial planning and anticipated sales growth in the SME context.

A Study on Trade Credit Financing:Evidence from Chinese A-share Listed Companies

Currently, China boasts the largest number of listed companies globally. Trade credit suppliers leverage insights into the future outlook of these entities, extending trade credit as a strategy to capitalize on profitable ventures. This study demonstrates that this informational advantage contributes substantially to the predictability of assessing investment returns. Focusing on A-share listed companies, those relying more on trade credit than on debt financing exhibit heightened potential for future sales growth and stock returns. The predictability of return associated with trade credit is particularly pronounced in firms characterized by a greater degree of information asymmetry. Consequently, this paper aims to investigate the factors influencing the utilization of trade credit and the correlation between its use and the future prospects of listed companies relying on this financial mechanism.

The Brand Value of Earnings: An Event Study of Consumer Responses to Earnings Announcements

ABSTRACT We provide evidence from the first short-window event study of consumers’ perceptual responses to earnings announcements using daily consumer perception data. We document a positive association between the change in consumers’ overall perceptions of a brand at the time of the earnings announcement and the earnings surprise—that is, a positive consumer earnings response coefficient (CERC). CERC is larger when there is greater traditional news or social media activity, indicating that news dissemination is an important channel for consumers to respond to earnings news. Moreover, CERC varies based on brand and consumer characteristics. Changes in consumer perceptions at the time of the earnings announcement are positively associated with changes in purchase consideration and intent and with changes in realized future sales growth. To maximize identification, we document a positive and statistically significant CERC in a controlled experiment. Our findings demonstrate the importance of earnings to an important stakeholder. Data Availability: Data are available from the sources cited in the text. JEL Classifications: M31; M41; G14.

Is the Net Promoter Score a Good Predictor of Future Sales Growth? : A Comparative Study with the Customer Satisfaction Index

Is the Net Promoter Score a Good Predictor of Future Sales Growth? : A Comparative Study with the Customer Satisfaction Index

Finance, informal competition, and expectations: A firm-level analysis

This paper documents the link between finance and informal competition. Using longitudinal firm-level data, we show that formal firms that are more exposed to the competition of informal firms are less likely to apply for a bank loan. This result is not due to sample selection, omitted variable bias, or reverse causality, and it is robust to different econometric specifications, including the use of an IV strategy. As for the mechanism explaining our result, we show that firms more exposed to informal competition have worse expectations on future sales growth, which in turn are associated with a lower probability of loan application. Finally, we provide suggestive evidence excluding supply-side mechanisms that may explain heterogeneities in firms’ access to finance.

The effects of changes in deferred revenues on future financial performance: Evidence from Borsa Istanbul

Raporlanan gelirler, bir firmanın geçmiş performansının değerlendirilmesine ve gelecekteki performansının tahmin edilmesine olanak sağlayarak yatırımcıların doğru kararlar almasına yardımcı olmaktadır. Bu sebeple gelirin ne zaman muhasebeleştirilmesi gerektiği konusu muhasebe teorisinin temel sorularından biridir ve finansal performansın ölçülmesinde önemli bir yere sahiptir.
 Bu çalışmanın amacı, ertelenmiş gelirlerdeki değişimlerin Borsa İstanbul'da faaliyetlerini sürdüren firmaların gelecekteki finansal performansının bir göstergesi olup olmadığını tespit etmektir. Bu doğrultuda, Borsa İstanbul’da işlem gören 195 finansal olmayan firmanın 2012-2020 yıllarına ait verilerden yararlanılmış ve ertelenmiş gelirdeki değişimlerin gelecekteki finansal performans üzerindeki etkisi panel regresyon analizi ile tahmin edilmiştir. Gelecekteki finansal performans; gelecekteki satış büyümeleri, gelecekteki kâr marjı ve gelecekteki varlık getirisi ile ölçülerek ertelenmiş gelirdeki değişimler ile ilişkilendirilmiştir. Analiz sonuçlarına göre, ertelenmiş gelirdeki değişimlerin gelecekteki satış büyümeleri ve gelecekteki varlık getirisini artırdığı tespit edilirken; net kâr marjı üzerinde istatistiksel olarak anlamlı bir etkisinin olmadığı sonucuna varılmıştır. Ayrıca çalışmada kontrol değişkeni olarak kullanılan kaldıraç oranı ve nakit akış oranı değişkenlerinin gelecekteki finansal performans üzerinde anlamlı etkilerinin olduğu belirlenmiştir.

Motivation impulses customers' online shopping intention via cashback and rewards mobile applications

The field of cashback and rewards applications is still a relatively new platform in the e-commerce platform that has not had many research papers pay attention to. The purpose of this study is to identify and analyze the factors that contribute to customers' impulsive online purchasing intentions when using cashback and rewards applications (apps) in Ho Chi Minh City. Using the theory of behavioral intention (TRA, TPB, TAM, UTAUT1,2) of Ajzen and Fishbein (1975, 1980), Ajzen (1985, 1991), Davis (1989) and Venkatesh, Thong and Xu (2012), and the Motivation Model - MM of Davis, Bagozzi and Warshaw (1992) as the foundation for proposing a research model, this research was conducted. Thus, six factors influence consumers' online purchasing intentions via cashback and rewards apps: Perceived Usefulness, Perceived Convenience Social Influence, Price Value, Trust, and Perceived Enjoyment. These factors are considered under two aspects: extrinsic and intrinsic motivation. Official quantitative research conducted in Ho Chi Minh City surveyed 220 consumers. According to Cronbach's Alpha, EFA factor analysis, and regression correlation, the six factors that suggest studying consumers' online shopping intentions via cashback and rewards apps in Ho Chi Minh City in the same direction are Price Value, Social Influence, Trust, Perceived Usefulness, Perceived Convenience, and Perceived Enjoyment, in order of strength. In general, when factors are classified as intrinsic or extrinsic motivations, research indicates that extrinsic motivations have a greater influence on users' intention for using. Additionally, the research reveals no differences in online shopping intention via cashback and rewards apps based on income or age, but did discover differences based on gender. Since then, proposing some governance implications for Vietnamese online shopping businesses in order to provide solutions for future sales growth. As a result, the company may consider segmenting its users according to gender in order to prioritize the creation of extrinsic influences in addition to intrinsic motivational stimuli. It will effectively promote customers' consumption behavior.

How Does Corporate Social Responsibility Moderate the Adverse Effects of Product Failure in Social Media?

Synopsis The research problem This paper investigates how corporate social responsibility (CSR) moderates the adverse effect of product failure on promoting tweeting about a firm’s products, which subsequently affects sales growth. Motivation or theoretical reasoning Under the social contract theory, high-CSR-performance firms gain social approval and acceptance as they are perceived to have fulfilled their obligations and met society’s expectations. Society is more forgiving to these firms when they are involved in negative events such as product failure. The test hypotheses We hypothesized that firms’ CSR performance moderates the negative effect of product failure on tweet sentiment and that the increase in tweet sentiment leads to higher future sales growth. Target population We focused on the automotive industry due to its vast consumer base. We sampled all 16 car manufacturers that operate in the US. Adopted methodology Using aspect-based sentiment analysis, we identified 302,718 tweets from Twitter about the quality of cars and extracted the tweet sentiment. We used the car recall records to proxy for product failure. Analyses Multivariate regressions were used to test our hypotheses. Findings We found that firms’ CSR mitigates the negative effect of product failure on tweet sentiment about product quality and, subsequently, promotes sales growth. Our findings show that firms with strong CSR received significantly more net positive tweets than did those with weak CSR. Moreover, a 10% increase in net positive tweets was associated with a 0.43% increase in quarterly sales growth ([Formula: see text]). Of the three CSR types, governance CSR exerted the strongest effect on tweet sentiment and environmental CSR the second, while social CSR ranked the third. This paper extends the literature by investigating the effect of CSR on sales growth by altering social media tweeting.

The Number of Sales Digits as a Window into Future Sales Growth

The Number of Sales Digits as a Window into Future Sales Growth

The use of Net Promoter Score (NPS) to predict sales growth: insights from an empirical investigation

Net Promoter Score (NPS) has been widely adopted by managers as a measure of customer mindset and predictor of sales growth. Over time, practitioners have evolved the use of NPS from its original purpose as a transaction-based customer loyalty metric, towards a metric for tracking overall brand health which includes responses from non-customers. Despite enduring managerial popularity, academics remain skeptical of NPS, citing methodological issues and ongoing concerns with NPS measurement. This study re-visits the use of NPS as a predictor of sales growth by analyzing data from seven brands operating in the U.S. sportswear industry, measured over five years. Our results confirm—within the context of our study—that while the original premise of NPS is reasonable, the methodological concerns raised by academics are valid, and only the more recently developed brand health measure of NPS (using an all potential customer sample) is effective at predicting future sales growth.

항공운송 관련 업체들의 유·무형자원 투자 활동이 매출에 미치는 영향 연구

This study analyzed how investments of tangible and intangible assets by air transport companies affect their future sales growth.<BR> As for samples, this study selected 36 air transport companies that had their financial materials available from 2007 through 2019. As a result of analysis, this study found that advertising expenses exert a significantly positive(+) impact on the sales growth rate, but failed to confirm the effect of education and training cost on the outcome of companies. As a result of verification of the effect of capital expenditure on the sales growth rate, this study also found that it has a significantly negative(-) effect. In other words, capital expenditure does not contribute to the sales growth rate which is a general measured value for expansion of growth probability and market share of companies. The result of this study implies that systematically-planned investments are considered necessary for increasing sales for creation of outcome for air transport companies to be used for improvement of outcome when air transport companies obtain tangible assets and invest for creation of intangible assets after COVID-19.

The micro and macro of managerial beliefs

This paper studies how biases in managerial beliefs affect managerial decisions, firm performance, and the macroeconomy. Using a new survey of US managers I establish three facts. (1) Managers are not overoptimistic: sales growth forecasts on average do not exceed realizations. (2) Managers are overprecise: they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic after positive shocks and too pessimistic after negative shocks. To quantify the implications, I estimate a dynamic general equilibrium model in which managers of heterogeneous firms use a subjective beliefs process to make forward-looking hiring decisions. Overprecision and overextrapolation lead managers to overreact to firm-level shocks and overspend on adjustment costs, destroying 2.1% to 6.8% of the typical firm’s value. Pervasive overreaction leads to excess volatility and reallocation, lowering consumer welfare by 0.5% to 2.3% relative to the rational-expectations equilibrium. These findings suggest overreaction could amplify asset-price and business-cycle fluctuations.

Managers’ Investment Decisions: Incentives and Economic Consequences Arising from Leases

What incentives do managers face that might give rise to inefficient investments in leases? If managers make inefficient investments in leases, what economic consequences arise for those managers and their firms? We develop a model of expected investments in leased assets and use the residuals from the model as proxies for inefficient investments. We find that, in contrast to investments in capital expenditures, leasing appears to be a mechanism through which managers can seemingly over-invest, even among firms with high quality financial reporting and negative free cash flows. Examining economic consequences, we predict and find that unexpected investments in leased assets trigger increasing future sales growth but declining future earnings growth for as long as three years ahead. We also find a negative relation with contemporaneous stock returns, suggesting investors view unexpected investments in leases as value destructive. Finally, despite negative returns consequences, we find that unexpected investments in leases are associated with higher CEO compensation driven primarily by future sales growth. Our study suggests that compensation contracts that reward growth may give managers’ incentives to drive sales growth with larger-than-expected investments in leased assets, which lead to slower future earnings growth and negative share price consequences for investors. Our results should inform managers and board members, investors, and researchers interested in investment efficiency, corporate governance, and leases.

Uncertainty and Change: Survey Evidence of Firms' Subjective Beliefs

This paper studies how managers plan under uncertainty. In a new survey panel on German manufacturing firms, we show that uncertainty reflects change: Planning incorporates higher subjective uncertainty about future sales growth when the firm has just experienced unusual growth, and more so if the experience was negative. At the quarterly frequency, subjective uncertainty closely tracks conditional volatility of shocks: Both exhibit an asymmetric V-shaped relationship with past growth. In the cross section of firms, however, subjective uncertainty differs from conditional volatility: planning in successful firms—either large or fast-growing—reflects lower subjective uncertainty than in unsuccessful firms even when the size of the shocks is the same.

Does the performance of private investment in public equity firms behave differently in different life cycles?

ABSTRACT Private investment in public equity firms (PIPE) is growing exponentially across the globe, and most of the theoretical and empirical works are accessible for the U.S. and European settings. There is a lack of studies in emerging markets like India. Our empirical research consists of 810 public equity (PE) transactions, out of which 761 are PIPE deals for the period 1998–2016. The study aims to investigate whether PIPE deals show different performance in different life cycles as distinct stages and operating targets. Under the hypothesis of information asymmetry and financial distress, we find that PIPE issuance significantly impacts sales growth, returns on equity, and operating performance. It is evident that the growth stage shows an adverse impact on future sales growth and profitability while it's encouraging for return on equity. Our findings based on the firm's life cycle show that maturity and stagnant stage reveal pronounced effects. Moreover, investor type and investment flow either from Indian-dedicated, foreign, and co-investment show a favourable impact on future profitability. One of the study's essential findings is that a firm in the growth stage needs more investment in the form of PIPE issuance, and it shows a significant impact on profitability and liquidity.

Asymmetric Inventory Management and the Direction of Sales Changes*

ABSTRACTWe study manufacturing firms' asymmetric inventory investment in response to sales changes. Focusing on the costs of resource adjustment and stockout that likely differ in sales‐increasing and sales‐decreasing periods, we predict and find that inventory investment declines less during periods with sales decreases than it rises during periods with sales increases. We validate this claim by showing that managers' expectations of future demand and desire to avoid inventory stockouts are important determinants of this asymmetry. In addition, we find that asymmetric inventory investment provides useful information for predicting future sales growth, and that both managers' and analysts' sales forecasts are positively associated with the asymmetry. Lastly, we document that forecasts of future sales growth that incorporate asymmetric inventory investment are associated with lower absolute forecast errors than benchmark forecasts. Overall, we highlight the importance of inventory information in understanding managers' resource adjustment and utilization decisions that have implications for forecasting future demand. Our findings on asymmetric inventory management provide new insights to fundamental analysis based on inventory signals.

Surveying business uncertainty

We elicit subjective probability distributions from business executives about their own-firm outcomes at a one-year look-ahead horizon. In terms of question design, our key innovation is to let survey respondents freely select support points and probabilities in five-point distributions over future sales growth, employment, and investment. In terms of data collection, we develop and field a new monthly panel Survey of Business Uncertainty. The SBU began in 2014 and now covers about 1,750 firms drawn from all 50 states, every major nonfarm industry, and a range of firm sizes. We find three key results. First, firm-level growth expectations are highly predictive of realized growth rates. Second, firm-level subjective uncertainty predicts the magnitudes of future forecast errors and future forecast revisions. Third, subjective uncertainty rises with the firm’s absolute growth rate in the previous year and with the magnitude of recent revisions to its expected growth rate. We aggregate over firm-level forecast distributions to construct monthly indices of business expectations (first moment) and uncertainty (second moment) for the U.S. private sector.

The Influence of the Trade-off between Profitability and Future Increases in Sales on Cost Stickiness: Evidence from Jordan

This study aims at analyzing cost stickiness under the dilemma between current profitability and future sales increase. The study population consisted of all Jordanian industrial companies listed on the Amman Stock Exchange (ASE) during the period (2007-2017). The study sample consisted of (30) industrial companies, were used in the analysis. Panel data regression was used to test the relationship between the variables in the study. Results supported the Anderson et al. (2003) argument in that selling, general and administrative expense for Jordanian industrial firms listed in Amman stock exchange (ASE) follow the sticky cost behaviour, they increased by (0.34%) for 1% increase in sales, however, they didn&amp;rsquo;t change by any sales decrease. During sales decline results showed that future sales growth did not have a stressing effect on cost stickiness and didn&amp;rsquo;t drive greater cost stickiness, however, changes in profitability was proved to have a significant positive relation to cost stickiness when sales decrease, meaning that managers apply greater adjustments in SGA (greater cost stickiness) in the case of the attainment of unfavourable changes in profitability. The study recommended a number of recommendations, including Companies should know the factors that affect the cost behavior and take into consideration when analyzing costs and making administrative decisions in companies which will, in turn, improve the process of making administrative decisions and investment decisions.

Socially responsible corporate customers

Corporate customers are an important stakeholder in global supply chains. We employ several unique international databases to test whether socially responsible corporate customers can infuse similar socially responsible business behavior in suppliers. Our findings suggest a unilateral effect on corporate social responsibility (CSR) only from customers to suppliers, an evidence further supported by exogenous variation in customers’ close-call CSR proposals and by product scandals. Customers exert influence on suppliers’ CSR through positive assortative matching and their decision-making process. Enhanced collaborative CSR efforts help improve operational efficiency and firm valuation of both customers and suppliers but increase only the customers’ future sales growth.

Beyond cheap talk: management's informative tone in corporate disclosures

AbstractThis study investigates the information content of Management Discussion and Analysis (MD&amp;A) reports of listed Chinese companies. We develop a Chinese word dictionary and measure the tones of MD&amp;As. Our results indicate that tone is positively associated with future earnings and is particularly useful when a firm's future prospect is uncertain, accounting information is difficult to understand, or board monitoring is strong. Further analyses show that tone also predicts future cash flow, future sales growth, market reactions, analysts’ revisions, and institutional investors’ shareholdings. Together, we provide robust evidence that in emerging markets such as China, management tone conveys valuable information beyond cheap talk.