Industry-specific Variables Research Articles

Impact of Financial Performance and Economic Value Added (EVA) On Stock Returns before and after Covid-19 Pandemic: A Case Study of Telecommunications Companies Listed on IDX

This research aims to investigate the impact of financial performance and Economic Value Added (EVA) on stock returns of telecommunication companies listed in the Indonesia Stock Exchange before and after the COVID-19 pandemic. Financial performance in this research is proxied by Return on Assets (ROA), Return on Equity (ROE), Price-Earnings Ratio (PER), Debt-to-Equity Ratio (DER), Net Profit Margin (NPM), and Earnings per Share (EPS). The study employs a purposive sampling method and selects 10 companies in the telecommunication sub-sector for analysis. The type of research used is a quantitative research design, including Panel Data regression analysis and the Wilcoxon Signed Ranks Test. The findings of this study show that ROA, ROE, and PER significantly impacted stock returns before COVID-19, however, this impact did not exist after the pandemic; DER, NPM, and EPS consistently affect stock returns both before and after the pandemic; and EVA only becomes significant after the pandemic. Simultaneously, ROA, ROE, PER, DER, NPM, EPS, and EVA influenced stock returns before COVID-19, but they did not have any impact after the pandemic. Despite these individual shifts, there are no significant differences in overall financial performance metrics and stock returns between the before and after COVID-19 periods. Future research should consider additional financial metrics or external factors such as market volatility, inflation rates, or industry-specific variables to provide a more comprehensive understanding of stock return determinants.

A systematic review of models for the prediction of corporate insolvency

A thorough evaluation of recent developments in bankruptcy prediction models developed specifically for listed firms in India is presented in this research. Beginning with influential contributions from the evolution of bankruptcy prediction methodologies is traced through various statistical techniques, including logistic regression, neural networks and discriminant analysis. Recent innovations, such as duration models, partial least squares with support vector machines, and efficiency-driven distress prediction, are discussed in the context of their applicability to the Indian market. The paper highlights the significance of early warning systems in the wake of bankruptcy reforms in India and examines the regulatory framework's impact on bankruptcy prediction modeling. And it goes further into how macroeconomic variables and industry-specific variables might make bankruptcy models better predictors. Limitations such as small sample sizes, short time periods for samples, and the incorporation of qualitative data into predictive models are highlighted in the study as areas that require further investigation in future studies. Overall, this paper provides valuable insights for academics, practitioners, and policymakers involved in bankruptcy prediction and risk management within the Indian corporate sector.

How do regulatory costs affect mergers and acquisitions decisions and outcomes?

Regulations introduce substantial costs and constrain firms’ cost structures. This paper introduces a firm-specific measure of regulatory costs and explores its role in mergers and acquisitions (M&A) decisions; specifically, large (small) firms with high regulatory costs are likely to acquire (be acquired by) firms in the same industry. In contrast, regulatory costs do not have such an effect on cross-industry acquisitions. Herein, I introduce econometric techniques, including accounting for additional industry-specific variables, alternative regulatory cost measures, and difference-in-differences estimators, to address potential identification issues. Furthermore, regulatory costs drive acquisitions contributing to shareholders’ wealth; hence, regulatory cost burden is a crucial factor in M&A decisions and outcomes.

Approaches to sustainability-driven innovation in high-performing Italian firms: A cross-case analysis

This paper investigated the nexus between sustainability-oriented innovation (SOI) initiatives and exceptional profitability in high-performing companies. To this aim, employing a multiple comparative case study methodology, we analyzed 10 cases that excel in both return-on-sales (ROS) compared to industry medians and are actively engaged in SOI initiatives with public evidence. The findings of the study are categorized into internal and external factors affecting company performance, shedding light on managerial practices, organizational culture, and industry-specific variables. From a managerial standpoint, this paper offers valuable insights for managers seeking to balance between sustainable practices, encompassing multiple social and environmental aspects of corporate initiatives, while optimizing economic performance. The paper’s originality lies in its contribution to a deeper understanding of the factors influencing the profitability of SOI and their implications for company management. This exploratory research seeks to expand the knowledge of the relationship between SOI and financial performance (FP), providing a foundation for future research in this domain.

THE SIGNIFICANT CONTRIBUTION OF BANGLADESHI COMMERCIAL BANKS LIQUIDITY POSITION, BANK SIZE, AND INTERNAL CAPITAL GENERATING ABILITY TO INCREASE PROFITABILITY

The banking system is the lifeblood of an economy. This study aims to inspect the extent of the impact of banks’ managerial issues in terms of liquidity position, bank size and internal capitalgenerating capacity on the profit-making ability of commercial banks in Bangladesh during the period of 2007 to 2018. To examine data, a static panel model is constructed by considering 57 commercial banks. Indicators of a bank’s profitability include return on assets, return on equity, and net interest margin. The Fixed Effect model and the Random Effect models are considered as the baseline estimations and the Ordinary Least Square estimation was performed to inspect the robustness of the data. The study suggests that the liquidity position and internal capital generation rate have a highly positive and significant impact on bank profitability. But bank size is significantly negatively correlated with banking profit. The rivalry, as assessed by the HerfindahlHirschman Index, has a strong beneficial impact on the profitability of banks, supporting the impact of industry-specific variables. Inflation and spread are two macroeconomic factors that have a detrimental but minor effect on bank profitability. The findings might increase management’s awareness of the banking sector in Bangladesh as well as provide a proposition to policymakers.

Do Indian banks perform better in corporate governance than other SAARC nations? An empirical analysis

Purpose This paper aims to investigate the role of corporate governance on the bank profitability of Indian banks vis-à-vis South Asian Association for Regional Cooperation (SAARC) nations. Design/methodology/approach For the Corporate Governance Index, the authors examined board accountability, transparency and disclosure and audit committee, while Tobin’s Q, return on equity and return on assets are used to measure the bank’s profitability. The study used a two-stage analysis based on balanced panel data for robust findings. Sample of this study consists of 60 commercial banks from India and 60 banks from SAARC nations for the period of 2009–2021. This study used panel regression and a generalized method of moment approach using the CAMELS framework on banking industry-specific variables to determine their respective impacts. Findings The findings of this study suggest that board accountability is positive and significantly affects the profitability of banks as indicated by return on assets, return on equity and Tobin’s Q. In contrast, the audit committee has a positive and insignificant impact on return on assets, return on equity and Tobin’s Q, while transparency and disclosure have a negative and significant impact on these metrics. Furthermore, the country dummy result shows a significant positive impact on all the bank performance parameters, implying that Indian banks have the highest degree of convergence with corporate governance as compared to other SAARC nations. Research limitations/implications This study provides insight to the regulators, policymakers and financial institutions to evaluate the role of corporate governance in emerging economies. However, the findings of the study should be interpreted with caution, as the results are sensitive to the disparity between India and other SAARC nations' government policies, climatic circumstances and cultural or religious traditions. Originality/value To the best of the authors’ knowledge, this is the first attempt to gauge the performance of Indian banks vis-à-vis SAARC nations using the CAMELS framework approach. Further, findings of this study suggest some novel evidence tying corporate governance quality with the profitability of banks among SAARC nations.

Effects of Banks Specific Factors on Dividend Policy: A Case of Commercial Banks of Pakistan

Looking at the dividend situation more attentively makes it seem like a jigsaw puzzle with pieces that don't match. The primary aim of this research is to ascertain the impact of industry-specific variables on the dividend policies of commercial banks that are publicly traded on the Pakistan Stock Exchange. In this context, the dependent variable is dividend policy, as indicated by the dividend payout ratio proxy. The independent variable comprises bank-specific variables, including revenue growth, ownership structure, liquidity, profitability, financial leverage, taxation, and the firm's life cycle. Secondary data spanning the years 2009 to 2019 was meticulously gathered from the annual reports of every bank under consideration. Descriptive statistics (mean, standard deviation, minimum, and maximum value) and inferential statistics techniques (pooled ordinary least squares (OLS) and fixed effect models) are employed to analyze the data. The findings from the fixed effect model indicate that the predictors of ownership structure, liquidity, profitability, leverage, taxation, life cycle, and development account for 84% of the variance in firm dividend policy. These predictors have an effect of 0.84 percent on the dividend policy. The dividend policy is significantly and positively impacted by profitability and financial leverage, based on what the fixed effect model found. Conversely, the life cycle of the company exerts a substantial and adverse influence on dividend payments.

Upstream oil and gas mergers and acquisitions: Domestic transactions in the U.S

This paper investigates drivers of mergers and acquisitions in the upstream industry by applying an empirical approach based on domestic transactions during last two decades in the U.S. The oil and gas industry, particularly, upstream industry has seen rapid developments in recent years. The discovery of new resources in unconventional oil and gas parallel to the horizontal drilling and fracking technology, the U.S oil and gas market shows changing patterns which is also reflected in investments in the oil and gas industry. Mergers and acquisitions in the upstream industry in the U.S has experienced increasing patterns, especially in domestic levels (post Shale revolution, booms and changing dynamics over last two decades). Our study recognizes that underlying facts of mergers and acquisitions investments in the oil and gas industry can vary from other industries and can be different than traditional economic explanations. The empirical results suggest that industry-specific variables have stronger influence on mergers and acquisitions than economic and political indicators. The drivers can be different based on various transaction forms and deal levels. Our findings provide a comprehensive view, test various theories of mergers and acquisitions and direct to sector-specific stylized facts of the U.S oil and gas market.

Efek Dari Makro, Industri dan Karakter Spesifik Perusahaan Terhadap Non Performing Loan Di Indonesia

The role of the banking sector is very important for the country's economic system, so it is important for banking institutions to maintain their profitability and efficiency. Currently the banking sector is facing the threat of credit risk indicated by the NPL, where this risk can affect the financial well-being and the role of the banking system. This study aims to examine the effect of bank-specific variables, macroeconomic variables, and industry-specific variables on credit risk as indicated by the NPL level in the Indonesian banking sector. The sample used in this study was 46 banks which were companies listed on the Indonesia Stock Exchange (IDX) during the period 2000 to 2020. The results showed that only bank-specific variables, namely bank capitalization, bank performance, loan growth, and bank diversification, were affect the level of NPL banking sector in Indonesia. Meanwhile other bank specific variables, namely bank size, bank inefficiency, ownership concentration, as well as macroeconomic variables (GDP growth, inflation, public debt, unemployment) and industry specific variables (interbank concentration) do not affect the level of credit risk as indicated by the NPL level of the banking sector in Indonesia.

Determinants of private banks performance in Ethiopia: A partial least square structural equation model analysis (PLS-SEM)

This study examines the factors affecting Ethiopia’s private bank performance. The study followed a causational research design employing data from 2010–to 2021. The study unit of analysis is Eleven private banks in Ethiopia. The study also uses PLS-SEM with Gaussian copula (GC) estimation because of its advantage in resolving econometric concerns of endogeneity. According to the study’s findings, industry-specific factors and macroeconomic variables have a negative statistically significant effect on bank performance. On the other hand, bank-specific factors have statistically positively affected both bank performance and the banking industry. Besides, industry-specific positively mediates the relationship between bank-specific factors and bank performance. The macroeconomic variables do not affect bank and industry-specific variables. Since Bank-specific factors enhance profit and industry (market share), continuous supervision and assistance from stakeholders can prevent banks from failing, improve their financial performance, and neutralize the industry’s adverse effect on the bank performance. Also, its mediating role through increasing the private banks’ market share may be due to the leading government-owned bank’s monopoly over the banking industry. The failure of banks could lead to the collapse of the entire economy. The current study fills a vacuum in the body of literature because it considers previously overlooked factors that affect bank performance, i.e., industry-specific variables and their mediating role on the effect of bank-specific factors on bank performance.

What are the factors that determine risk-adjusted returns of Croatian life insurers?

Purpose: When conducting their business, insurers face various risks that are controlled for in order to mitigate them and protect the insured, inter alia. Moreover, being aware of the factors that determine the reward-to-risk ratio for insurers is also of crucial importance. Thus, the aim of this research is to identify potential factors that influence risk-adjusted returns of life insurance companies. Methodology: The analysis is conducted on a sample of life insurers that operated in Croatia in the period from 2016 to 2020. For this purpose, risk-adjusted ROA, i.e. the Sharpe ratio, is used as a risk-adjusted return measure, while independent variables encompass several insurance firm-oriented and insurance industry-specific variables, as well as variables depicting the level of macroeconomic development, stock market, bond market and institutional development. Results: After conducting dynamic panel analysis, the obtained results suggest that the premium growth rate, asset-based size, the net premium to surplus ratio, i.e. leverage, as well as bond market development are significant factors when determining risk-adjusted returns. Conclusion: Risk-adjusted returns are determined by insurance firm-oriented factors which are important not only to investors but also to insurance market regulators and insurance firm managers.

The valuation effects of hotel mergers

This study aims to evaluate the merger effect of hotel mergers between 1981 and 2019 and assess which theoretical framework mergers in the lodging industry would conform. Previously, no work has been done about the nature of hotel mergers using the combined return, while this lack of thoroughness in assessing the motivation of those mergers has triggered different interpretations. The design of this study follows the traditional framework of an event study by assessing various types of cumulative abnormal returns around the announcement date. The key finding of this study suggests that the nature of hotel mergers strongly supports the synergy hypothesis. In order to explore the causal inferences of this result by bidder and target, an additional analysis was conducted by regressing the cumulative abnormal returns on accounting measures as well as merger- and hotel industry–specific variables. This panel data analysis showed that in a merger where both the bidder and target are affected, the amount of total debt, being engaged in the casino business, and whether the merger was involving a stock swap sent out positive signals to the market, whereby longer duration and higher deal value lifted the undervalued target. JEL Classifications: G34 (Mergers; Restructuring; Corporate Governance)

Yield spread determinants of sukuk and conventional bonds

Despite increased economic turmoil over the past few years, the Islamic financial sector including sukuk has shown tremendous growth and stability. This study examines the yield spread determinants of sukuk and conventional bonds. We comparatively assess the effects of firm- and industry-specific variables, bond characteristics, and macroeconomic conditions on the yield. Our sample data features bonds and sukuk of different maturities issued by 58 publicly traded (listed) firms in Malaysia. For sukuk, primary determinants are the firm-specific indicators which indicate lower yield spreads. Moreover, sukuk spreads do not widen with equity volatility, making them less risky than conventional bonds. For conventional bonds, both firm-level and bond-specific characteristics significantly affect yield spreads. Higher financial leverage with shorter maturity is associated with low yields and low spreads. Findings in this study present new insights and important policy implications for investors trading in and regulators governing sukuk and conventional bonds.

Assessing the impact of banking efficiency, operations, and regulation on banking performance: Fresh insight using dynamic correlated framework on the data set of Russia and Ukraine

The purpose of this study is to investigate how banking industry-specific variables like regulation, efficiency, and operations affected nonperforming loans (NPLs) in Ukraine and Russia from 1995 to 2019. This study has employed the robust unit root test and cross-sectional dependencies technique along with a new DCCE approach. The dynamic correlated method is employed as it provides the best results when data suffers from cross-sectional dependencies. The study concludes that loose credit policy and lower profitability help in rising NPLs. However, in the context of macroeconomic variables, volatile interest rates, and exchange rate fluctuations are the main reason for NPLs in Russia and Ukraine. The research work also highlights the issue of cross-sectional dependencies and provide substantial methods to resolve the problem of cross-sectional dependencies and provide robust results. Findings will help policymakers to recognize the relevance of industry-specific variables in managing NPLs along with other macroeconomic variables.

Comparison of Takaful & Non-Takaful Insurance Companies of Pakistan Under Pre, During & Post Economic Crisis 2008

The purpose of this study is to examine the determinants of profitability of Takaful Insurance and Non-Takaful Insurance companies under the tenure of pre, during, and post-financial crisis. The stimulus of this study was the absence of research on this topic. The profitability is measured using Return on Assets whereas macro-economic variables i.e. GDP and Inflation and industry-specific variables i.e. Liquidity, Leverage, and Size are used as independent variables. Panel regression results indicated that macro-economic variables had an insignificant impact on the profitability of the Insurance sector under all three phases, whereas industry-specific variables have a miscellaneous impact on profitability. Takaful insurance companies have better liquidity management than the Non-Takaful insurance companies under post-economic crisis tenure too as they get better returns in terms of profitability. It is concluded that insurance companies’ sectors i.e. Takaful-insurance companies and Non-Takaful Insurance companies should emphasize their internal or industry-specific indicators for their stability.JEL Classification: H8, F0, L1, M2How to Cite:AsadUllah, M., Hassan, M., & Siddiqui, Z. A. (2021). Comparison of Takaful and Non-Takaful Insurance Companies of Pakistan: Under Pre, During, and Post Economic Crisis 2008 . Etikonomi, 20(1), 201 – 212. https://doi.org/10.15408/etk.v20i117325.

Модель циркулярної економіки як один із трендів сталого розвитку

The article presents the advantages of implementing the conception of circular economy (CE), which are not limited to reducing pressure on natural systems, but are based on economic benefits associated with the creation of new jobs, increasing labor productivity, and increasing the competitiveness of the economy. In the course of the study, the author proves that the effective implementation of the conception of circular economy should rely on simultaneous consideration of both perspectives: taking measures by enterprises and implementing at both the political and social levels. Enterprises will only implement environmental methods if it provides them with economic benefits. However, without the support of initiative in the top-down direction (for example, grants and tax incentives), aimed at limiting the use of raw materials, limiting emissions and pollution, there will be no permanent closure of the cycle of material flows. The implementation of the conception of circular economy is based on the so-called 3R (recycle, reuse, reduce). The author analyzes the principles of circular economy, namely: preservation and increase of natural capital by controlling limited reserves and balancing the flows of renewable resources; optimizing the use of resources through the circulation of products, components and materials used with the highest utility in both the technical and biological cycle; maintaining the efficiency of the system by identifying and projecting negative external effects. The developed conceptual model provides for a balance between «top-down» and «bottom-up» approaches, taking into account (not limiting) the disparities in the motivation of different stakeholders of the CE conception in the context of harmonization of economic, environmental and social benefits. The development of sustainable business models is associated with ecodesign, as well as with reverse supply chains. The carried out research can become the basis for further empirical research and provide assistance to decision makers in creating different scenarios by including more specific and industry-specific variables.

Green Production as a Factor of Survival for Innovative Startups: Evidence from Italy

Many studies have analyzed empirically the determinants of survival for innovative startup companies using data about the characteristics of entrepreneurs and management or focusing on firm- and industry-specific variables. However, no attempts have been made so far to assess the role of the environmental sustainability of the production process. Based on data describing the characteristics of the Italian innovative startups in the period 2009–2018, this article studies the differences in survival between green and non-green companies. We show that, while controlling for other confounding factors, startups characterized by a green production process tend to survive longer than their counterparts. In particular, we estimate that a green innovative startup is more than twice as likely to survive than a non-green one. This evidence may support the idea that environmental sustainability can help economic development.

Does Banking Efficiency, Regulation, and Operations Affect Banking Performance in South Asia: Dynamic Correlated Model Approach

This study intends to find out how the bank or industry-specific variables like banking regulation, banking efficiency, and banking operations affect non-performing loans in South Asia. To achieve this objective this study has employed robust 1st and 2nd generation Unit root tests, CIPS test, PMG and Dynamic Correlated Model approach on the panel data set of selected South Asian countries from 1995 to 2019, to avoid the implications of Cross-sectional dependency on the result analysis. The finding of the study shows that loose banking operations, lower exchange rate, and volatile interest rate have a significant positive relationship with non-performing loan whereas lower banking efficiency have a significant negative relationship with non-performing loans. The study also confirms the importance of cross-sectional dependencies in getting more accurate and robust results. This study will be useful for policy implementation and to understand the importance of micro banking variables in controlling non-performing loans, apart from contributing toward the literature of cross-sectional dependency.

Does Banking Efficiency, Regulation, and Operations Affect Banking Performance in South Asia: Dynamic Correlated Model Approach

This study intends to find out how the bank or industry-specific variables like banking regulation, banking efficiency, and banking operations affect nonperforming loans in South Asia. To achieve this objective this study has employed robust 1st and 2nd generation Unit root tests, CIPS test, PMG and Dynamic Correlated Model approach on the panel data set of selected South Asian countries from 1995-2019, to avoid the implications of Cross-sectional dependency on the result analysis. The finding of the study shows that loose banking operations, lower exchange rate, and volatile interest rate have a significant positive relationship with nonperforming loan whereas lower banking efficiency have a significant negative relationship with nonperforming loans. The study also confirms the importance of cross-sectional dependencies in getting more accurate and robust results. This study will be useful for policy implementation and to understand the importance of micro banking variables in controlling nonperforming loans, apart from contributing toward the literature of cross-sectional dependency.

TÜRKİYE’NİN YURT İÇİ DENİZYOLU KURU YÜK TAŞIMACILIĞI TALEBİ: NİTEL BİR ARAŞTIRMA

Domestic dry cargo shipping is a dynamic market influenced by many variables. When shipping demand and shipping demand forecast studies are reviewed, it is seen that macroeconomic factors are prominent. Therefore, this research aims to explain the determinant variables of domestic dry cargo shipping demand forecast in terms of industrial marketing. In order to determine these factors, face-to-face semi-structured interviews have been conducted with a total of 17 domestic maritime dry cargo shipping experts. The findings of the study have been examined under the following themes: “current issues”, “future projections”, “future challenges”, “competitive power”, “weaknesses”, “port’s effects”, “shipowners’ effects”, “shippers’ effects”, “shipowners’ choice”. These findings have enabled a unique contribution toward finding out industry specific variables and dynamics.