Corporate Performance Measurement Research Articles

Profit bridges that disambiguate impacts of currency fluctuations from other marketing variables

We extend the normalized approach to constructing profit bridges proffered in a recent paper to examine the impact of currency exchange rate fluctuations within a multinational corporation. In doing so, we describe a profit bridge that would measure corporate performance distinct from that which would measure the performance of business units, including metrics for the impact of volume, price, variable cost, offering mix, and exchange rate changes.

PENGARUH PENGENDALIAN INTERNAL, GOOD CORPORATE GOVERNANCE, DAN SISTEM PENGUKURAN KINERJA TERHADAP PENCEGAHAN FRAUD (Studi kasus pada Instansi Pemerintah di Daerah Istimewa Yogyakarta)

This study aims to examine the effect of internal control, good corporate governance, and performance measurement system on fraud prevention in government agencies of the Special Region of Yogyakarta. The method used in this research a quantitative method in the form of primary data using a questionnaire. The sampling technique used was the purposive sampling method. The population in this study were permanent employees and non-permanent employees in the Special Region of Yogyakarta with a sample size of 80 respondents. Data collection is done by giving questionnaires directly to respondents via a google form. The data in this study were tested using the Software Statistical Package for Social Sciences (SPSS) version 20. The results of this study indicate that internal control does not affect and fraud prevention, while good corporate governance and performance measurement system have a positive effect on fraud prevention. Keywords: Internal Control, Good Corporate Governance, Performance Measurement System, Fraud Prevention

Digital Transformation Consulting: Toward a Human-Technology Performance Model Digital Transformat

As the focus on digital transformation and its unexplored opportunities is prospering, consulting firms have also turned their attention to it. Despite this increased attention, digital transformation project failure rate remains high, thereby reaffirming the “IT productivity paradox” or “AI productivity paradox. The purpose of this paper is to holistically scrutinize the current approach of digital transformation consulting. A deductive qualitative study draws upon the Human Technology Performance model to elucidate papers on digital transformation published by four major management consulting firms in 2014-2019. Whereas the focus on customer-centricity and some measures of corporate performance is prominent in the consulting approaches, the study results have revealed several “blind spots” that are still either neglected or poorly covered. Three main blind spots are particularly prominent from the analysis. First of all, consulting firms often apply a “one size fits all” approach, thereby neglecting contextual factors, such as age, size, or industry. Secondly, they neglect process level in the return on investment of IT. Thirdly, the suitability of IS development methods remains poorly considered. Hence, the paper argues that, while consulting firms purport to support digital transformation exigences and efforts, they, in fact, adhere to traditional approaches to business consulting.

Does intellectual capital efficiency explain corporate social responsibility engagement-firm performance relationship? Evidence from environmental, social and governance performance of US listed firms

This paper examines the effect of corporate social responsibility on firm performance by accounting for the role of Intellectual capital efficiency as a mechanism underlying Corporate Social Responsibility (CSR)– firm performance association. In this study, we consider 2132 US companies and develop a structural model for CSR, Intellectual Capital (IC), and firm performance while contemplating endogeneity issues in analyses over the period of 2009–2018. The value-added intellectual capital co-efficient is employed as a proxy measure for IC performance, taking into consideration corporate performance and governance measures. The findings suggest that CSR has a significant effect on firm performance. In particular, the findings reveal that CSR has a link with IC, indirectly affecting a firm performance, and the association between CSR and firm performance is partially mediated by Intellectual capital efficiency.

The impact of corporate governance on sustainable value creation: A case of selected Indian firms

ABSTRACT This paper examines whether the quality of corporate governance has a significant impact on sustainable value added by the companies. It uses a value-based measure of corporate performance, that is, sustainable value added (SVA) that measures the costs on the basis of value created by a company in the process of utilizing economic, environmental and social capital. Quality of corporate governance has been measured through an index. The association between the two has been examined for a sample of companies listed on the Bombay Stock Exchange (BSE) Carbonex index for 2015–2019. The data were analysed through the panel data regression analysis. This paper found an insignificant impact of the corporate governance quality on sustainable value, but there exists a positive but a weak correlation between the two. It can be attributed to poor disclosure practices as the data on environmental and social performance are not disclosed by the Indian companies.

Performance Assessment of Japanese Electricity and Gas Companies during 2002–2018: Three DEA Approaches

This study has compared Japan’s major electricity and gas companies in terms of their corporate performance measures from 2002 to 2018 using three types of Data Envelopment Analysis (DEA) approaches. We develop a new type of efficiency measures and indexes for DEA and then compare the performance of major electric power companies and city gas companies by examining a recent data set that include years after the Fukushima Daiichi Nuclear Power Plant accident. The data set incorporates the number of patents as an output that represents companies’ capability for technology innovation to investigate intertemporal changes of efficiency through index measures. The results provide us with two important findings. First, the electricity industry has experienced long-term difficulty due to the nuclear plant disaster; while the gas industry experienced less difficulty from the accident. Second, both industries have been gradually improving performance measures in recent years. However, the gas industry has outperformed the electricity industry. From the results, this study discusses important policy implications for Japan’s energy utility industry and academic research on the industry.

Board diversity and corporate social performance: Does the family firm status matter?

AbstractThe aim of the study is to investigate whether the board of directors (BoD) diversity affect corporate social performance (CSP), an alternative measure of corporate performance based on social outcomes. The article distinguishes between a structural diversity of boards (proxied by director independence), and a demographic diversity in boards (proxied by gender diversity) and our concept of CSP. The sample is constituted of the firms listed to the FTSE‐MIB index, which comprehends the most Italian capitalized listed firms. The analysis, covering a ten‐year period (2010–2019), provides evidence that independent directors positively affect CSP and that gender has no effect on CSP. We also tested the association between BoD and CSP separately for family firms (FFs) and non‐family firms (NFFs) to investigate whether FF status is a contingent condition modifying the effect of board features on CSP. Our result provide evidence of it.

Corporate social responsibility and sustainability performance measurement systems: implications for organizational performance

Corporate social responsibility and sustainability performance measurement systems: implications for organizational performance

Corporate Performance Measurement Tool via Economic Value Added

Execution estimation matters in the present complicated business field independent of the sort, nature, and volume variety in business. On the off chance that the consequence of the exhibition estimation turns out badly because of the broken or erroneous determination of tool(s), at that point, the all-out cycle will refute in due time henceforth an endeavor to assess Economic Value Added (EVA) as an option in contrast to conventional execution measure. For the most part, it is accepted that EVA is intended for giant organizations and is the best exhibition measure. The potential favorable circumstances, openings and constraints of utilizing EVA as an exhibition estimation instrument are examined to energize the clients/perusers to consolidate EVA with their present arrangement to receive the likely rewards from it.

Impact of corporate performance on stock price predictions in the UAE markets: Neuro‐fuzzy model

SummaryPredicting stock price remains one of the challenges for investors' investment strategies. This study helps with accurate prediction and the main factors affecting variations in stock prices. It applies an adaptive neuro‐fuzzy model on 58 listed firms from both the Abu Dhabi Securities Exchange and the Dubai Financial Market for the period 2014–2018 to estimate the predictive power of corporate performance measures and their significance. After examining four performance predictors—return on asset (ROA), return on equity (ROE), earning per share (EPS), and profit margin (PM)—the study finds that ROE is the most significant predictor and ROA is the least. EPS is the most influential profitability measure and PM the least.

Cost management and corporate performance measurement in sustainable supply chain

Purpose- The purpose of the study is to propose a model to measure the success performance of businesses which have adopted Sustainable Supply Chain Management (SSCM) practices. Methodology- A literature review was carried out based on some concepts such as SSCM, sustainability and business performance, social performance and financial performance, and sustainable cost management. Findings- When the literature is examined, it is seen that SSCM is considered to be more of a business's practices for reducing environmental impact. In addition, In many studies which examine the relationship between SSCM and firm performance, cost savings are often used as financial performance indicators. But, the fact that sustainability-based practices will generate many different cost factors has been overlooked in many studies. On the other hand, It is seen that the number of studies on cost management and performance measurement in SSCM practices is quite limited. Conclusion- Considering the effects of sustainability-based practices in measuring business performance is important for the definition of long-term success indicators and accurate performance measurements.

LGBTQ WORKPLACE INCLUSION BEFORE AND AFTER OBERGEFELL V. HODGES: ASSOCIATION WITH TOBIN’S Q AND ROA

Diversity and inclusion advocates claim organizations benefit from diversity. Diversity is purportedly associated with many positive outcomes such as increased creativity, reduced turnover, increased productivity, a broader talent pool from which to choose, improved employee performance, increased innovation, potentially new customers and, ultimately, higher profits. Many studies support that claim, finding evidence that diversity is associated with higher company returns and market values. We examine if the association of company LGBTQ-benefits and policies with corporate returns and market valuechanged in the years around the 2015 Supreme Court ruling in Obergefell v. Hodgesthat legalized same-sex marriage nationally. The Corporate Equality Index (CEI), calculated and reported by the Human Rights Campaign (HRC.org 2020a),is used as a proxy for the level of company LGBTQ inclusiveness and support. The CEI is meant to provide a tool to rate U.S. businesses on their treatment of LGBTQ employees, investors and consumers, thereby focusing on a different aspect of diversity than simply defining diversity based on gender and/or race and ethnicity. Results indicate that higher HRC CEI ratings appear to be associated with higher Tobin’s q, a measure of long-term corporate performance. We find similar results for three time periods, pre-Obergefell, during the Supreme Court decision year, and post-Obergefell. These results indicate that diversity policies toward the LGBTQ community are associated with higher company market value, regardless of how uniformly US law has regarded same-sex marriage.

VALUE-BASED INTERMEDIATION AND REALISATION OF MAQASID AL-SHARIAH: ISSUES AND CHALLENGES FOR ISLAMIC BANKS IN MALAYSIA

The expectation of stakeholders towards Islamic banks has changed and goes beyond avoiding riba and compliance with Shariah but to become value-based intermediaries and fulfil the objective of Shariah Many studies argue that the goals of Islamic banking should not be restricted to maximizing shareholder wealth but should also entail raising the standard of living and welfare of the community. This paper aims to discuss the issues, trends, and challenges for Islamic banking in Malaysia towards satisfying various stakeholders’ needs through the implementation of value-based intermediation (VBI). VBI has been firstly introduced by Bank Negara Malaysia in 2017. In VBI, maqasid al-shariah is established as the fundamental framework in deciding the underlying values, moral compass, and goals in Islamic finance. Thus, realisation of maqasid al-shariah has created its own challenges in VBI implementation. Some earlier studies have discussed issues related to the principles and approaches related to VBI but neglecting other important mechanisms to drive its successful implementation. This review paper highlighted that corporate governance and performance measures are essential elements in VBI implementation. Future studies are encouraged to further explore the possible indicators that can fairly assess the efforts of Islamic banks in satisfying stakeholder needs in line with maqasid al-shariah. Further studies in corporate governance also deemed important to establish the relationship between the key corporate governance players and stakeholder management in Islamic banks.

The Role of Corporate Culture in Performance Measurement and Management Systems

Recently, there has been increasing pressure to change current performance measurement and management systems from control systems to those that support learning and continuous improvement. This change requires a specific corporate culture that supports the effective operation of performance measurement and management. This paper aims to clarify the relationship between corporate culture and performance measurement and management systems. Questionnaire survey data from Czech medium and large companies were collected and analyzed by Pearson’s chi-squared test to validate the proposed hypothesis. The research findings confirmed that performance measurement and management systems of companies that devoted sufficient energy and attention to performance-driven culture are more effectively developed. Analysis of different performance-driven culture attributes revealed which are the most important ones.

Corporate Performance Evaluation through Economic Value Added (EVA) and Other Conventional Measures: An Empirical Study

A successful performance measure evaluates how well an organisation performs in relation to its objectives. Since the primary objective of commercial organizations is normally assumed to be the maximisation of the wealth of its shareholders, it follows that performance measures should evaluate this. Besides the traditional measures like Return on Net worth (RONW), Return on Capital Employed (ROCE) and Earnings per Share (EPS), EVA is a new measure available to the corporate managers. The EVA framework developed by Stern Stewart & Company is gradually replacing the traditional measures of financial performance on account of its robustness and its immunity from creative accounting. The present paper measures corporate performance of selected Indian companies by using EVA and other conventional measures. An attempt has been made to analyze the effectiveness of Economic Value Added over conventional measures of corporate performance. The relationship between different measures of performance is studied by using correlation and regression analysis. After detailed analysis it was found that HUL is the best performing company as per three measures of performance namely, EVACE, ROCE and RONW. It was also found that RONW and EVACE are highly correlated and RONW and ROCE significantly affect EVACE.

Corporate Performance Measurement Using An Integrated Approach: A Mongolian Case

The main goal of the study is to calculate the relevant efficiency scores of companies listed on the Mongolian Stock Exchange based on their efficiency scores. We apply an integrated principal component analysis (PCA) and data envelopment analysis (DEA) model to estimate corporate efficiency. The objective of using this integrated method to reduce the dimensionality of the dataset analysed and to evaluate companies’ efficiencies reliably. The number of variables using in the DEA model affects the results directly because of the DEA method is sensitive to the number of input and output variables. The PCA method can reduce the number of variables so that the information loss would be the smallest. The research uses one hundred publicly-listed Mongolian companies’ financial statements of 2015. Initially, DEA is applied conventionally using seven input and four output variables. Then, PCA is applied with the same variables to determine Principal Component (PC) scores, which are used for DEA as variables to improve its discrimination power.

THE EFFECT OF AUDIT COMMITTEE EFFECTIVENESS ON CORPORATE PERFORMANCE OF SHARIA-COMPLIANT COMPANIES IN INDONESIA

This research aims to examine the effect of Audit Committee Effectiveness on corporate performance of sharia-compliant companies. We score this effectiveness using the activity, competency, size and independence of the Audit Committee, while Tobin’s Q is used to measure corporate performance of sharia-compliant companies. The sample for this study is 63 Sharia manufacturing companies listed on the Indonesia Stock Exchange and on the Sharia Stock List released by the Indonesia Financial Services Authority from 2014 to 2015. Using multiple regression, the results show that Audit Committee effectiveness has positive effect on corporate performance of sharia-compliant companies. Based on this result, Sharia companies should increase the effectiveness of their Audit committee, as it is used by investors to make investment decisions.

Effect of Capital Structure on the Relationship Between Corporate Governance and Corporate Value of Companies Listed at the Nairobi Securities Exchange

The capital market authorities of different areas have from time to time issued regulations and guidelines for good corporate governance practices ensuring thorough and proper management of listed companies to align the interest of all stakeholders, ensure firm sustainability, and optimize corporate value. Despite these interventions, cases of corporate underperformance and failures attributed to financial distress and governance weakness continue to increase in magnitude and frequency. The main objective of the study was to determine the intervening effect of capital structure on the relationship between corporate governance and corporate value of companies listed at the Nairobi Security Exchange (NSE). The study tests hypothesis that there is no intervening effect on the capital structure on the relationship between corporate governance and corporate value for companies listed at the NSE. The key theories underpinning the study were agency theory as the main guiding theory and the trade-off theory. The data was acquired from past audited financial statements of companies listed at the NSE. The study used a census survey for sixty-four listed companies at the NSE. The analysis covered a period of five years between 2013 and 2017. Corporate Governance was measured by a composite of Board Independence, Board Size, Board Composition, and Corporate Gender Diversity. Capital structured was measured by leverage Different performance metrics have been used to evaluate corporate value worldwide by regulators and scholars. This study used Tobin - Q which has become an important tool for measuring corporate performance due to its incorporation of the market value of shares in its computation. The study adopts a positivism research philosophy and descriptive design. Descriptive statistics and diagnostic tests were conducted on the data thereafter inferential statistics namely correlations analysis and regression analysis were used to test the hypothesis. The panel data procedure was considered more appropriate as the sample data contained both cross-sectional and time-series data. The diagnostics tests were used to test for bias in the model and the regression used to test the strength and direction of the variables. Baron and Kenny (1986) approach was used to test the intervening effect of capital structure on the relationship between corporate governance and corporate value. The finding was that capital structure had no significant intervening effects on the relationship between corporate governance and corporate value. This research contributes to the line of literature that examines the desirability of corporate governance in enhancing corporate value. These insights in explaining corporate governance, capital structure, and corporate value relationships are useful for academic understanding and business and public policy formulations. Keywords: Corporate governance, capital structure, agency theory, trade off theory, corporate value. DOI: 10.7176/RJFA/11-17-10 Publication date: October 31 st 2020

2. Relationship between corporate sustainability performance and brand performance: evidence from Borsa Istanbul

Purpose- The purpose of this study is to analyze the relationship between corporate sustainability performance and brand performance. By using brand value as a measure of corporate performance, in this study we focus on the crucial question of whether corporate sustainability performance pays off or not. Methodology- The sample comprised of 63 non-financial companies included in Borsa Istanbul 100 Index between 2014 and 2018. We test our hypotheses by simultaneously estimating the panel logit and panel probit models. We have two models to test the hypothesis. In the first model the dependent variable is the brand performance. Brand performance was proxied through Brand Finance data. In the second model the dependent variable is the corporate sustainability performance. The proxy that we used for the corporate sustainability performance was the membership of BIST Sustainability Index. Findings- Analysis results showed that the sustainability performance, financial performance, firm size, firm age and their involvement in the service sector had a positive impact on brand performance. When the determinants of the corporate sustainability performance of companies were examined, it was seen that brand performance, firm size and their involvement in the manufacturing sector had a positive impact on sustainability performance. Finally, the financial leverage of companies with high brand performance and sustainability performance was also found to be high. Conclusion- The empirical results tend to confirm the positive influence of corporate sustainability performance on brand performance. Further, the findings indicate that companies with a leading level of brand performance have a higher sustainability performance.

Conceptual organisation of customer engagement: Understanding the concept of engagement and considering the structure of customer engagement factors

Customer engagement has been increasingly recognised as a measure of corporate performance. Several practitioners and researchers have proposed various customer engagement concepts. The concept of engagement has been discussed earlier in academic fields such as psychology and education before the notion of customer engagement became popular. However, researchers across disciplines have not reached a consensus on the implications, the factors that constitute engagement and the measures of engagement. Therefore, inconsistencies in the interpretations of engagement have complicated the use of the customer engagement concept to understand complex customer behaviours and to measure customer–company relationships. In this context, the present study summarises the differences in the interpretation of engagement concepts across disciplines, and identifies the sources of difficulty in interpreting engagement. The study develops a framework in terms of definitions, measurement methods and scales, research methods, and constructive concepts to better understand the concept of customer engagement.