Financial Performance Measures Research Articles

Auditor Materiality in Expanded Audit Reports: More (Disclosure) is Less

AbstractThe United Kingdom (UK) Financial Reporting Council (FRC) introduced expanded audit reports to improve audit report disclosures and render audits more transparent to financial statement users. This study examines audit materiality threshold disclosures, providing descriptive evidence of how auditors disclose materiality information in UK audit reports. This research uses manual content analysis (i) to assess auditors’ benchmarks and the percentages auditors apply to those benchmarks. The analysis examines (ii) auditors’ use of non‐GAAP benchmarks, including non‐recurring and recurring item exclusions and (iii) auditors’ rationales for their benchmark choices. The research finds that auditors choose a wide variety of benchmarks and apply a wide range of percentages to the chosen benchmarks. Non‐GAAP adjustments are pervasive. Auditors’ rationales for benchmark choices include that the benchmark is a financial statement performance measure, and the benchmark eliminates volatility. The authors question whether the FRC's expanded disclosures have met its transparency objectives and concludes that ‘more (disclosure) is less’.

Measurement of Financial Performance of Banks in India pre, during and post-Covid-19 using TOPSIS method

TOPSIS is a mathematical model which compares alternatives while taking multiple criteria into consideration.This is done normalising scores, and computing the difference between the ideal best and worst. This paper analyses the performance of eight banks in India using the data by calculating banking performance ratios. Performance of three years is analysed- 2019 that is pre covid,2020 which is during covid and 2021 which is after covid. We analyse these years as Covid has had a major macro-economic impact on every sector. Many sectors saw the blues, but the banking sector was relatively stable. We will analyse this in detail further in the paper.

The psychological and financial impacts of an emotional culture of anxiety and its antidote, an emotional culture of companionate love

RationaleAnxiety is an increasingly common problem in society, including at work, yet the effects of an emotional culture of anxiety remain unexplored. We offer a new lens on anxiety in the workplace, examining its collective enactment in the form of an emotional culture of anxiety. ObjectiveThis study examines the implications of an emotional culture of anxiety for psychological and financial outcomes within a poorly performing healthcare organization. We also examine whether an emotional culture of companionate love, which helps people “calm and connect”, can counteract the negative effects of an emotional culture of anxiety. MethodsDrawing on survey data of 822 employees from 85 departments in a large US medical center and a time-lagged archival measure of financial performance across those departments, we used ordinary least squares regression and random coefficient regression modeling to examine the main effects of these two emotional cultures and the buffering effect of an emotional culture of companionate love on an emotional culture of anxiety for department costs, department psychological safety, and individual employee burnout and satisfaction. ResultsWe find significant direct relationships between an emotional culture of anxiety and an emotional culture of companionate love on employee burnout and satisfaction in the predicted directions. We also find a significant interaction between the two emotional cultures, with a culture of companionate love attenuating the relationship of a culture of anxiety on job satisfaction, burnout, and financial performance in the form of time-lagged department costs. ConclusionsOur results indicate that a culture of companionate love can be a protective force against the negative outcomes of an emotional culture of anxiety. Examining these two emotional cultures concurrently offers a better understanding of how to address the pernicious effects of anxiety in organizations.

The Impact of Credit Risk Management on the Financial Performance of the Banks Listed on the Dhaka Stock Exchange: A Two-Step System Generalized Method of Moments Panel Data Analysis

Prior Bangladeshi studies on the relationship between credit risk management and the financial performance of listed banks suffered from a dynamic endogeneity bias, which led to misleading conclusions. As a result, this study examines the impact of credit risk management on the financial performance of banks listed on the Dhaka Stock Exchange for the period from 2011 to 2018. The equity multiplier ratio (EMR), capital adequacy ratio (CAR), non-performing loan (NPL) ratio, interest coverage ratio (ICR), and provision for credit losses to total credit (PCLTC) are proxies for credit risk management. The study characterizes banks' financial performance from three perspectives: bank management, as indicated by return on equity (ROE); the market, as indicated by Tobin's Q (TQ); and shareholder value, as indicated by economic value added (EVA-ln). The study sample comprises 29 of the 30 listed banks, and the two-step system generalized method of moments (GMM) model is used to test the hypotheses. This study finds mixed results, i.e., none of the credit risk variables used in this study, with the exception of ICR, affect the sampled banks' performance equally from each of the three perspectives. Particularly, the results show that ICR has a significant positive impact on all measures of banks' financial performance, whereas PCLTC has no impact on any measure of financial performance. The EMR has a significant positive impact on ROE but does not affect TQ and EVA-ln. CAR has been shown to improve ROE and TQ while having an insignificant effect on EVA-ln. The NPL ratio has a negative effect on ROE but does not affect TQ and EVA-ln.

Investigating the effects of the COVID-19 pandemic on medical device strategy and firm performance

The object of study is the importance of medical technology and healthcare delivery in the COVID-19 pandemic. The COVID-19 pandemic has caused many changes to the business, healthcare, and societal landscape. The changes have had varying effects on key industries, demanding them to realign to fit new pandemic-imposed environmental conditions. This study seeks to investigate the effects of the COVID-19 pandemic on medical device strategy and firm performance of company X, and to provide recommendations and insights on strategies to ensure continuity post-pandemic. A qualitative analysis of the results from nine interviews with associates regarding the effects of COVID-19 on firm performance and strategy at company X was explored. The findings from a thematic analysis of the interview data are reported and related to the study's research objectives. Findings showed that the COVID-19 pandemic forced company X to adjust its strategy to align it with the changing environment. However, the data showed that the unknown nature and uncertainty of the COVID-19 pandemic environment meant that the realignment of strategy to the prevailing dynamics was unique. This study's key findings indicate that COVID-19 strongly influenced financial performance, which influenced firm performance significantly. In addition, financial performance measures were found to have more impact than non-financial performance measures such as strategic performance. The main recommendation emanating from the study was to improve the organization’s agility, versatility, and speed. This would be achieved through simplifying processes, streamlining decision-making, and enhancing speed in the market. Agility and versatility are necessary to overcome or take advantage of new developments from the pandemic and post-pandemic environment. This research study can assist medical enterprises in other countries to stream their services and align strategy to meet the dynamic environment caused by the COVID-19.

Analysis of Financial Performance, Achievement of Strategy through Financial Perspective and Implementation of SDGs

This research was conducted to analyze financial performance, strategic achievement through a financial perspective, and implementation of sustainable development goals (SDGs) during the Covid-19 pandemic, namely from 2019-2021. The companies that are the object of this research are the agricultural sector, and the plantation sub-sector which is listed on the Indonesia Stock Exchange (IDX) and publishes an annual publication report for the 2019-2021 period. Analysis of strategy achievement through a financial perspective is reviewed using a dummy variable where if a strategy formulation is detected from a financial perspective and can be achieved, it is given a value of one and if it is not, it is given a value of zero. The measurement of financial performance is proxied by ROA and the measurement of the implementation of sustainable development goals (SDGs) is proxied using an index based on confirmed items.

Assessment of Loan Portfolio Quality on Financial Performance of Commercial Banks in Kenya

Deteriorating loan portfolio quality is negatively impacting the financial performance of commercial banks in Kenya. Though, Kenya’s banking sector is well established and plays key part in developing county’s economy, it is facing constraints in terms of absolute growth due to this declining loan portfolio quality. Consequently, stakeholders of these commercial banks especially creditors, depositors and shareholders are incurring huge financial losses in absolute terms on their deterioration. Although, there are studies that have established the factors that affect commercial banks’ financial performance, until the time of the study there were unresolved issues. This calls for commercial banks need to be proactive like modernizing their risk mitigation measures to more precise measures to deal with expected credit losses. Banks need to change in this time of enhanced financial information, computing power and data analytics for best-in-class fair projection of credit risk for tangible competitive benefits. Study has demonstrated need for robust approach to commercial banks’ lending in dynamic financial markets for sustainable commercial banking financial performance in Kenya. Study aimed at assessing loan portfolio quality on financial performance of commercial banks in Kenya. Study objectives were to: determine significance of loan loss provision on financial performance of commercial banks in Kenya, evaluate allowance for loan loss impact on financial performance of commercial banks in Kenya and gauge bearing of gross impaired loans and advances on financial performance of commercial banks in Kenya. Researcher classified loan portfolio quality indicators as independent variables, regulatory frameworks, market and infrastructural dynamics as intervening variables, and measures of financial performance of return on assets and equity of commercial banks in Kenya as dependent variables. Research utilized descriptive design using percentages, mean, standard deviation, correlations, and panel data regression model. Researcher narrowed down targeted population to 38 fully operational commercial banks in Kenya by end of year 2020. Study applied census approach and relied on published audited financial reports. Researcher used document review secondary data collection tool and analysed data using SPSS program Version 24.0 supported by Microsoft excel windows 2010. Tables and figures were used to present study outcome. There was largely positive significant correlation between each independent and dependent variable proxies. Although on contrary, allowance for loan loss and gross impaired loans and advances association with return on equity were positive and negative insignificant correspondingly. Study general conclusion was that loan portfolio quality largely had positive significant association with Kenya’s commercial banks’ financial performance. Ccoefficient of determination of return on assets and return on equity were 0.1620 and 0.0363 respectively. That meant loan portfolio quality was responsible for 16.20% and 3.63% change in Kenya’s commercial banks’ financial performance in terms of return on assets and equity respectively. Overall, it is resolved, loan portfolio quality parameters; loan loss provision, allowance for loan loss and gross impaired loans and advances are determinants of financial performance (return on assets return on equity) of Commercial banks in Kenya.The study recommends management of these banks need to vigorously pursue measures to effectively manage loan portfolio quality to realise rising returns on assets and equity.

The Effect Of Electronic Banking On The Performance Of Companies In The Banking Sector Listed On The Indonesia Stock Exchange

This research aims to examine and analyze the effect of the provision of electronic banking (ATM and Mobile banking) of financial performance againts banking by using banking data listed on the Indonesia stock exchange (BEI) in 2018-2020. This saw the current banking condition requaires banks to adapts with condition and situation that happened because technological development will have an impact in all aspects of life, including the world of banking. This type of research is quatitative, sampling uses a purposive sampling technique. With the number of samples is as much as 38 bank. The analytical method used is multiple linear regression analysis.This result show that ATM has a significant positive effect on financial performance. While mobile banking has not significant effect on financial performance. With ROA as a measure of financial performance

The relationship of self-efficacy with entrepreneurial success: A meta-analytic replication and extension

The replication of meta-analyses is important for developing stable and accurate insights into entrepreneurship. To that end, we replicate key aspects of the meta-analysis conducted by Miao et al. (2017) on the relationships between entrepreneurial self-efficacy (ESE) and financial measures of firm performance and extend their meta-analysis by considering generalized forms of self-efficacy and non-financial measures of entrepreneurial success. We expand the number of included samples from 27 in Miao et al. (2017) to 159. Overall, we find that the relationship between self-efficacy and success is small (ρ = 0.24) using guidelines from Cohen (1988); however, the relationship between ESE and at least partially financial measures of success was moderate, but larger in size (ρ = 0.44 vs. ρ = 0.31), than that estimated by Miao et al. (2017). We find that effect sizes vary widely depending on the type of success variable—with small to practically insignificant relations between self-efficacy and firm size as measured by the number of employees. In addition, we find stronger relations between ESE and success than generalized self-efficacy. Altogether we find that without properly accounting for the influence of the type of success variable, researchers might draw incorrect conclusions regarding the role of self-efficacy in entrepreneurial dynamics. We discuss the methodological and theoretical implications of our findings.

A Text Analytic on Dynamic Capability

Business strategy is a variable that affects the use of financial and non-financial performance metrics by firms. Companies use financial and non-financial performance measurements as a source of information to make continuous changes. This constant improvement encourages the development of dynamic capabilities so that the business may compete effectively in an environment of intense competition. A company's business plan serves as a guide for enhancing its fundamental skills. Unique resources in the form of dynamic capabilities represent core competences. Companies have diverse dynamic capabilities. This distinction provides a corporation with a competitive advantage over its rivals. This study aims to identify the published development map and trend of Dynamic Capability from trustworthy sources. More than 873 Scopus-indexed research publications were reviewed. The export data is then processed and analyzed with the R Biblioshiny program to generate the development map for Dynamic Capability. According to the study's findings, the number of publications on the evolution of research's function continues to climb. In addition, the study draws a number of important findings about Dynamic Capability and the direction of future research development.

Cash Flow Ratio Analysis as a Measuring Tool for The Company's Financial Performance at PT. Astra International Tbk

The research question concerns the cash flow ratio as a measure of the company's financial success at PT. Astra Indonesia Tbk during 2018 - 2021. This research aims to examine PT. Astra International Tbk's cash flow ratio as a measure of the company's financial performance for the period 2018-2021. The research methodology employed in this method is descriptive quantitative research, or research techniques that describe data as numerical values. This research provided use of secondary data, mainly information gathered from the official website of the Indonesia Stock Exchange's records or archives. In 2018-2021, a ratio of operating cash flow to current obligations less than one indicates that the situation is not favorable. In 2018-2019, a ratio of operating cash flow to interest payments that is more than 1 is favorable. In 2018-2020, a ratio of operational cash flow to capital expenditure below one indicates that the situation is not good. In 2018-2021, if the ratio of operating cash flow to total debt is less than 1, the situation is not good. In the period between 2018 and 2021, the ratio of operating cash flow to net profit is good since it can exceed 1. The conclusion that can be drawn from the findings of this research is that the results of the five cash flow ratios listed above must still be examined, as values that are above the standard ratio are only 2 ratios and those that are below the standard ratio are 3 ratios. It indicates that PT. Astra International Tbk's financial performance is categorized as poor because it is unable to effectively manage its cash flow, resulting in an insufficient turnover between cash in and cash out so that in the long term PT. Astra will experience losses.

Relationship among Environmental Performance, R&D Expenditure and Financial Performance: Evidence from Indian Manufacturing Firms

The study is conducted to analyse the effect of environmental performance on the financial performance of 67 Indian manufacturing listed companies, categorized into most polluting and least polluting companies for the period of 7 years i.e. from 2014–15 to 2020–21. The present study has employed environmental performance as independent variable measured by various environmental performance measures. The content analysis has been conducted to estimate the environmental performance scores. The study covers both measures of financial performance, i.e. accounting-based measures (Return on Equity) and market-based performance measures (Market to Book value ratio) as dependent variables. The control variables used in the study are ownership structure (promoter ownership, institutional ownership and foreign ownership), firm size, leverage ratio, firm age and sale to asset ratio. By using the feasible generalized least square method, the study found a positive association of environmental performance with financial performance of both categories of companies. In contrast, an adverse effect of research and development expenditure on performance has been observed. The study witnessed the moderating impact of research and development expenditure on the relationship between environmental and financial performance. The study found the mixed effect of ownership structure on the financial performance of manufacturing companies.

An Analysis of Special Needs Student Busing

Population growth can lead to public school capacity issues as well as increased school bus utilization, which, in turn, can result in longer school bus transport times for regular and special needs students. Special needs or medically fragile students are children with special health care needs who are at increased health and safety risk. It is common practice to provide special needs students with specially-equipped buses and/or special classroom environments with specific facilities or services. However, the assignment of student services to schools is regularly made without regard to bus transportation considerations for special needs students. Considering the potentially negative impact of long school bus rides on these students, we present the first systematic, integrated analyses of special needs student busing and classroom assignments. We provide models and algorithms for maintaining administration-based transportation financial performance measures while simultaneously designing smarter transportation networks considering both student geographical location and service needs.

Analysis of Effectiveness and Efficiency in Measurement of DKI JAKARTA's Financial Performance in 2019-2020

This study aims to determine the effectiveness and efficiency in measuring DKI Jakarta's financial performance in 2019-2020, whether DKI Jakarta programs in 2019-2020 have been effective and efficient for the community and become an internal evaluation for DKI Jakarta in 2019-2020. This research method uses quantitative descriptive, data collection is carried out with work programs on the 2019-2020 financial performance report of DKI Jakarta. In measuring the effectiveness of the 2019-2020 DKI Jakarta work progra,. The results showed that (1) The research analysis on measuring the effectiveness of the DKI Jakarta government's performance in 2019-2020 was included in the effective category. Of all program realizations, the program plans are categorized as effective on average. This shows that the output programs that have been made by the DKI Jakarta government in 2019-2020 have reached the community according to their potential. (2) Research analysis on measuring the efficiency of the DKI Jakarta government's performance in 2019-2020 is in the efficient category. Of all budget realizations from the budget plan, it is in the average category, although in detail there are several programs that are not available due to the COVID-19 pandemic.

Economic value-added (EVA) myths and realities: evidence from the Indian manufacturing sector

PurposeThe main aim of this paper is to examine the claim that economic value added (EVA) advocates its superiority over the traditional accounting-based financial performance measures, i.e. profit after tax (PAT), earnings per share (EPS), return on assets (ROA), return on equity (ROE) and return on investment (ROI) in the Indian manufacturing sector and at the same time, give empirical facts. It also tests and examines the information content of various performance measures and their relationship with stock returns.Design/methodology/approachThe paper uses the sample of 534 Indian manufacturing companies from the Bombay Stock Exchange (BSE) during the period 2000–2018. Multiple regression models are applied to examine the information content of EVA and traditional performance measures in explaining shareholders’ returns.FindingsRelative information content tests revealed that traditional accounting-based measures such as EPS, ROE and ROA performed better than EVA in explaining the returns of Indian manufacturing companies. Incremental information content of EVA adds little contribution to information content above traditional performance measures. The claim of superiority of EVA over accounting-based measures in association with shareholder returns is proved invalid in Indian manufacturing companies.Originality/valueThis study concludes that EVA has no superiority over traditional accounting-based financial performance measures in explaining stock returns of Indian manufacturing companies. To achieve heftiness in outcomes, panel data are tested by using Breusch–Pagan–Godfrey (BPG) test for heteroskedasticity, Hausman’s test for fixed and random effect, variance inflation factor (VIF) test for multicollinearity and Durbin–Watson test for autocorrelation.

Environmental, social, and governance ratings and financial performance: Evidence from the European food industry

AbstractLong‐term value creation is expected not only to be concerned with maximizing shareholder value but also includes the impact on other stakeholders and the environment. Environmental, social, and governance (ESG) issues are therefore gaining increasing importance, in line with the growing demand for corporate sustainability. ESG ratings foster the comparison of companies with respect to their sustainable practices. This study aims to investigate how ESG ratings impact financial performance in the European food industry. Ordinary least squares regression is applied to analyze the relation between ESG ratings and financial performance over a 4‐year period from 2017 to 2020. The profitability measures Return on Assets (ROA) and Return on Equity (ROE) are employed as financial performance measures, while ESG ratings are obtained from the database CSRHub. Results show that higher ESG ratings are associated with better financial performance. Although the effect is modest in the present study, the findings support previous results that ESG ratings are positively related to financial performance. Nonetheless, they also highlight that ESG ratings strongly converge to the mean, which depicts the need to reassess whether ESG ratings are able to measure actual ESG behavior.

Analisis Kinerja Keuangan Badan Perencanaan Pembangunan Daerah, Penelitian dan Pengembangan (Bappedalitbang) Kabupaten Deli Serdang

The Regional Development Planning Agency, Research and Development (BAPPEDALITBANG) of Deli Serdang Regency is a regional technical institution in the field of regional development planning led by a head of the agency who is under and responsible to the Governor/Regent/Mayor through the regional secretariat. This study aims to assess the financial performance of Bappedalitbang Deli Serdang Regency for five fiscal years. In measuring financial performance, it is more focused on the Budget Realization Report (LRA). The measurement of financial performance is carried out to determine the absorption of the budget and the use of the budget during the five fiscal years on activities that exist in the agency itself. This research uses a qualitative approach with data collection techniques in the form of documentation. The analytical method used is descriptive method with the formula: compatibility analysis of spending which is divided into direct and indirect spending, effectiveness analysis, spending variance analysis, efficiency analysis and spending growth analysis. The results of the analysis show that the financial performance of the Deli Serdang Regency Bappedalitbang from 2019-2022 seen from the shopping compatibility analysis shows poor financial performance, because the total indirect spending is 51% and for direct spending 49%, so it can be said that the Bappedalitbang for the Regency Province Deli Serdang pays little attention to regional development. From the analysis of spending growth in 2019-2022 it is said to be good, because it can be seen that there has been a growth in spending for five years with a total of 1%, with a maximum value of 14% in 2019 and a minimum value of 3% in 2019. 2019-2022 can be said to be good, with a total comparison of 89%. However, judging from the effectiveness ratio of the use of the budget for five years, it can be said to be quite effective with the total ratio reaching 83%. Meanwhile, if viewed from the efficiency ratio, the Bappedalitbang Deli Serdang Regency is said to be quite efficient in using its budget from 2019-2022, with a total of 34 %, so in this case the Deli Serdang Regency Bappedalitbang has been able to make budget savings. 
 
 Keywords: Financial Performance, shopping compatibility ratio, efficiency, effectiveness, and variance.

Public Sector Financial Performance in Indonesia: Concepts and Regulations

Improving the public sector's financial performance is crucial to encouraging rapid economic growth throughout Indonesia. This paper aims to understand the essentials of the concepts and regulations of the public sector financial performance management in Indonesia. This study examines the performance of public sector organizations in Indonesia, especially looking at the definitions and regulations that form the basis of implementing this performance. The identification of the performance of the public sector in this paper seeks to see the basic concepts that serve as guidelines and the laws and regulations that form the background of the achievements of public organizations in Indonesia. In conclusion, it is revealed that the financial performance of the public sector in Indonesia refers to the applicable laws and regulations starting from the fundamental law, namely the 1945 Constitution, especially Article 23C, followed by several laws, government regulations, presidential regulations, and ministerial finance regulations. The measurement of public sector financial performance is regulated and determined by the Ministry of Finance through budget implementation performance indicators, which are seen from four aspects and twelve main indicators.

The impact of corporate social responsibility on the corporate financial performance: evidence from Russian and Dutch companies

This research paper aims to investigate the impact of Corporate Social Responsibility (CSR) reporting on Russian and Dutch companies’ financial performance (CFP). The theoretical framework we use is the stakeholder theory. The study applies regression analysis to obtain quantitative evidence of CSR-CFP relations. Companies’ CSR involvement is measured by reputation index - CSRhub. Return on equity ratio has been chosen as a measure of corporate financial performance. Our findings demonstrate a weak positive correlation between CSR and companies’ ROE. Moreover, the research shows the existence of a higher CSR impact on Russian companies’ financial performance comparing to the Dutch one. The results may become useful for corporate management while assessing a financial return from CSR strategies. This work also provides an alternative way for a quantitative operationalization of companies’ social performance, which is especially important for further statistical researches.

PENGARUH STRUKTUR MODAL, LIKUIDITAS , UKURAN PERUSAHAAN DAN UMUR PERUSAHAAN TERHADAP KINERJA KEUANGAN

Financial Performance is an analysis conducted to see the extent to which a company has implemented by using financial implementation rules properly and correctly. One measure of a company's financial performance that is directly related to the company's goals in general is the profitability ratio using Return on Assets. The purpose of this study was to determine the effect of capital structure, liquidity, firm size and firm age on financial performance. The theory used in this study is agency theory. The object of this research is the food and beverage sub-sector companies listed on the Indonesia Stock Exchange (BEI) in 2018-2020. Researchers conducted descriptive statistical tests, pooling test, classical assumption test, F test, t test, and coefficient of determination. The data analysis technique used is multiple linear regression analysis. The conclusion of this study is that there is not enough evidence that liquidity and firm size have a positive effect on financial performance. While the age of the company there is sufficient evidence of a positive effect on financial performance. There is not enough evidence of capital structure to have a negative effect on financial performance.