Net Income Growth Research Articles

Corporate Governance and Bank Performance in Nigeria: An Empirical Study

This study extensively investigated effectiveness of corporate governance in Nigerian banks for the period 2006-2018. The study adopted secondary data obtained fromannual reports of banks, CentralBank ofNigeria and Nigeria Stock Exchange. Regression analysis, unit roots and diagnostic test were used in the analysis. The Granger Causality test was applied to determine the direction of causality. The findings show that board audit committee has positive effect on net profit margin while block-shareholding and board composition has negative relationship on growth in revenue and growth in net income. It recommends optimum proportion of outside directors for effective governance impacting performance positively.

Impact of determinants of the financial distress on financial sustainability of Ethiopian commercial banks

The study aims to investigate the impact of determinants of financial distress on financial sustainability of Ethiopian commercial banks. The balanced panel data of 12 commercial banks of Ethiopia have been taken for the study from 2011 to 2017. The research deploys Ordinary Least Square (OLS) Regression Model. The indicators of financial distress are bank’s specific internals and macro-economic factors. The proxies of financial sustainability are Return on Assets, Return on Equity, Financial Stability Index and Bank Soundness. The findings reveal that the Absolute Liquidity Risk and Net Income Growth are found to be positive and significant and Solvency Risk negative and significant in relation to Return on Assets. Asset Quality is found to be positive and significant and Solvency Risk negative and significant with respect to Return on Equity. The Asset Quality and Net Income Risk are positive and significant and Solvency Risk is negative and significant with relation to the Financial Stability Index. Absolute Liquidity Risk and Liquidity Risk are positive and significant and Credit Risk negative and significant with Bank Soundness. Free Cash Flow and Net Income Growth are essential for enhancing Return on Assets and Bank Soundness, and managing equity within the prudential norms could bring forth short-term financial sustainability of commercial banks. By lowering provisioning of loan loss, Growth in Net Interest Income and managing Solvency Risk could ensure financial stability to the banks, which in turn leads to financial sustainability. The study reveals that financial sustainability of banks is insulated from the exposures of systematic risks originating from macroeconomic factors.

The Relationship between Governance Indicators and Firm Performance

The present study is concerned about the relationship between governance indicators (control of corruption, government effectiveness, regulatory quality, political stability, voice and accountability, and role of law) and performance (return on assets based book value, return on assets based market value, return on equity based on book value, return on equity based on market value, sales growth rate, net income growth rate, and Tobin’s q ratio) in listed companies on the Tehran Stock Exchange. Data related to firm performance indexes were gathered from 296 listed companies on the Tehran Stock Exchange from 1996 to 2016 by using the systematic elimination method. The data of six-fold governance indicators are computed annually by the World Bank and Heritage Foundation for different countries based on similar criteria. Moreover, the resultant statistical tests from panel data methods and multiple regression were administered using data analysis and R Software. The study results indicate a positive or inverse significant relationship between six indicators of corruption control, government efficiency, quality of law, political stability, right to comment, law rule, and listed companies' performance on the Tehran Stock Exchange. This study is innovative. It analyzes the relationship between all governance indicators and various firm performance measurements, which is not assessed in the Iranian and international studies. Hence, this study can contribute considerably to the development of knowledge in this field.

VALUE DRIVERS OF PRICE-EARNINGS MULTIPLES OF UNIVERSAL BANKS IN THE PHILIPPINES: A PANEL REGRESSION APPROACH

Valuation using P/E multiples has been done mostly in developed countries and some developing countries including the Philippines. However, variables that impact sound P/E multiples valuation has yet to be determined. The purpose of the study is to develop a valuation model using P/E multiples by using variables that will lead to sound valuation of firms. The application would be in the banking sector, specifically universal banks since these institutions are significant economic drivers in the Philippines. Utilizing data from the top ten [10] universal banks in the Philippines in terms of assets and capitalization from 2010 to 2017, selected macroeconomic variables, stock market index, and firm-specific variables were used in the proposed valuation model using panel data regression analysis. These variables are GDP growth rate, inflation rate, interest rate, return on equity [ROE], ROE growth rate, net income growth rate, earnings per share [EPS] growth rate, dividend payout ratio, Philippine Stock Exchange [PSE] index, and price-to-book [P/B] value ratio. Panel regression results showed that among the independent variables, ROE, EPS growth rate, P/B ratio, net income growth rate, and PSE index are statistically significant. Among the significant variables, ROE reduces P/E ratio by 51 times. This implies that an increasing ROE reduces the price per stock investors are willing to pay. Goodness of fit [R2] of the model is 74.83%, which is relatively good

Does the existence of ethics and compliance committees improve stock market and financial performance?

The major research question, in the title of this paper, was answered positively for stock market performance. The companies with Ethics and Compliance Committees (ECC) outperformed the non-ECC companies on five-year annual averages for both profit margin and net income growth rate, which may mean Wall Street investors are emphasizing non-financial performance indicators, as well as long-term financial performance indicators. Results are somewhat mixed, as investors rewarded ECC companies with superior stock market performance versus other financial measures, like returns on equity and assets, which were better for non-ECC companies. The empirical analysis in this paper relied upon prior research which had conducted content analysis of the 2015 charters of all the board committees of the Fortune top 200 corporations (Holcomb, 2017). This prior research identified 11 companies which had board committees with ethics and compliance duties, versus the Fortune top 20 companies, which delegated such duties to their audit committees. The empirical research in this paper has shown that the Ethics 11 companies outperformed the Fortune top 20 companies over the 2013-2017 period, primarily in the key stock market performance measure of the percentage change of the market capitalization from the end of 2013 until the end of 2017.

점진적 혁신과 급진적 혁신의 생산성과 수익성 : 의료·바이오 산업을 중심으로

We analyze productivity and profitability of incremental innovation group and radical innovation group after classifying companies which received R&D support from government into pharmaceutical industry, medical device industry and food industry. Growth Leading Industry is the industry which plays the role of the engine for the future growth. This industry has low percentage in the regional industries but is expecting high growth rate. Thus, investment focused on technology innovation is important in this industry. We define this industry as radical innovation group. Next generation pharmaceutical industry, IT medical device industry, and bio food industry are in this industry. Flagship Industry is the industry in which the proportion of the industry in the region is high but the growth rate is slowing down, stagnating or declining. We define this industry as incremental innovation group. Biotechnology, electronic medical devices and clean health food industry are in this industry. The indicators for productivity analysis are 'Sales revenue per employee', 'Added value per employee' and 'Value added ratio'. The indicators for growth analysis are 'Employee growth rate', 'Total assets growth rate', 'Net income growth rate', 'Operating profit growth rate' and 'Net sales growth rate'. Various comparative results between incremental innovation group and radical innovation group are provided. The results of the study, incremental innovation maintained a stable performance of the organization, but did not achieve a high level of performance. Radical innovations show high levels of performance, although the performance of the firm is not stable. Incremental innovation showed low performance with low technical level, and radical innovation showed high performance with high technical level. Incremental innovation is highly efficient but low in effectiveness, and radical innovation is low in efficiency, but high in effectiveness. The reason is that radical innovation is highly uncertain about performance, and Incremental innovation is low uncertainty about performance.

Banking Sector: Balance Sheet Profits Decline

Balance sheet profits declined markedly in January-July 2018 compared to the same period of 2017 mainly because of resumed growth in loan loss provisions. A positive factor was represented by growth in net interest income and in profits from regular banking operations.

Measuring Firm Performance: Testing a Proposed Model

Abstract Firm performance is a very complex and exhaustive concept. It can be related to many factors: starting with variables from balance sheet, income statement or cash-flow statement, continuing with research and development expenses or IT competences, and last but not least with intangible assets like human capital, goodwill, or brand value. The purpose of the present paper is to develop and test a model in order to measure firm performance by considering US companies that are ranked into the Global Fortune 500. In this study we used control variables (assets growth rate, net income growth rate and revenue growth rate) and depended variables – return on assets (ROA), debt to equity, research and development expenses to total operating expenses, environment, social and governance rating, Tobin‘s q – to measure firm performance. The article‘s findings suggest that when analyzing the firm performance much more factors must be considered.

Off-season Production of Tomato (Lycopersicon esculentum L.) Under Different Shading and Mulching Materials

.

ANALISIS PENGARUH PERTUMBUHAN RASIO-RASIO KEUANGAN, LABA BERSIH, DAN UKURAN PERUSAHAAN TERHADAP PREDIKSI PERTUMBUHAN LABA USAHA PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEJ

The objective of this research is to recognize influencies of financial ratios growth, net income growth, and companies' size growth in predicting operating profit growth for several period ahead. To predict the operating profit growth, 20 financial ratios which categorized into 5 constructs, net income, and companies' size are used. This study used secondary data from financial statement of 34 manufacturing companies which are listed on Jakarta Stock Exchange for period year 2002 to year 2004. These companies selected by purposive sampling technique. After data collected, it will be calculate and analyze with statistic test to get the result. Statistic test used 2 methods those are multivariate regression method to test the influences of the financial ratios growth, net income growth, and companies' size growth toward operating profit growth perdiction at individual level and Analysis of Moment Structures (AMOS) method which used to test the influences of financial ratios growth, net income growth, and companies' size growth toward operating profit growth prediction at constructs level. Multivariate regression analysis which done partially, resulted gross profit margin ratio growth, debt to asset ratio growth, and companies' size growth could be used to predict manufacturing companies' operating profit growth for 1 year ahead, and simultaneously, all independent variables significantly affect to manufacturing companies' operating profit growth prediction for 1 year ahead. Analysis of Moment Structures (AMOS) was resulting independent variables those significantly affect to manufacturing companies' operating profit growth prediction for 1 year ahead are profitability ratio growth, net income growth, and companies' size growth

Income inequality and the labour market in Britain and the US

We study household income inequality in both Great Britain and the United States and the interplay between labour market earnings and the tax system. While both Britain and the US have witnessed secular increases in 90/10 male earnings inequality over the last three decades, this measure of inequality in net family income has declined in Britain while it has risen in the US. To better understand these comparisons, we examine the interaction between labour market earnings in the family, assortative mating, the tax and welfare-benefit system and household income inequality. We find that both countries have witnessed sizeable changes in employment which have primarily occurred on the extensive margin in the US and on the intensive margin in Britain. Increases in the generosity of the welfare system in Britain played a key role in equalizing net income growth across the wage distribution, whereas the relatively weak safety net available to non-workers in the US mean this growing group has seen particularly adverse developments in their net incomes.

Managerial implications of off-balance sheet items in community banks

PurposeCommunity banks were affected distinctly by changes in banking regulation in the 1990s when compared with large commercial banks. These banks offer non-traditional finance items, presumably to compete with these financial institutions. This study aims to examine the importance of accounting for off-balance sheet (OBS) items when estimating the financial performance of community banks.Design/methodology/approachThis study applies a two-stage analysis pathway that initially calculates X-efficiency scores as part of the overall cost structure and then deploys data envelopment analysis bootstrapping method for a second-stage ordinary least square model.FindingsStudy findings indicate that failure to include OBS items in the X-efficiency calculation for community banks understates the efficiency performance of these banks. Furthermore, results indicate that factors internal and external to the community bank affect X-efficiency. Increases in OBS items are associated with growth in assets and growth in net non-interest income. Therefore, OBS items become an attractive alternative source of income and a mechanism for expanding output with the same volume of inputs. In addition, OBS items allow the largest community banks to deleverage their balance sheet, whereas the smallest community banks still emphasize on traditional lending products and benefit from existing equity. Also, larger banks may be using OBS items as a mechanism to isolate their performance from macroeconomic fluctuations.Research limitations/implicationsResearch limitations include a reduced number of community banks as consolidation accelerates partly because of compliance concerns.Practical implicationsThe approach used supports a series of community bank managerial approaches that may be adopted by management.Originality/valueThe results of this study show several reasons why community banks may have managerial incentives to include OBS items. As observed by Gilbert et al. (2013), community banks are adjusting their product line so as to operate efficiently. Community banks must provide a product line which provides margin and meets customer needs at a profit to the firm. OBS items allow existing staff to provide funds without additional equity requirements from the balance sheets. The increase in OBS activities may signal the perception that the associated interest income is less risky and less costly than other alternatives, including adopting technologies to diversify traditional loan product offerings. As community banks tend to have lower default rates than their larger counterparts, the most likely explanation is that the OBS interest risk is more attractive than compliance or development of mechanisms to offer a broader suite of traditional loan products.

Increasing Cauliflower Yields through Fertigation

Cauliflower is one the important vegetable crop in the tropics; the curd contains high fibres, potassium, carotene and vitamin C. However, the production and productivity of cauliflower in Indonesia has been low and cannot meet the demand, resulting in high importation of cauliflowers into Indonesia. Bogor Agricultural University has developed potential lowland cauliflower genotypes, BOB017 and BOB020, with higher productivity. In this study, we evaluated three fertigation methods on the growth, yield and economic returns of the two lowland cauliflower genotypes. The experiment was arranged in a split-plot design with four replications. The main plot contained two cauliflower genotypes, BOB017 and BOB020. The subplot was three fertilizer application methods: through drip irrigation, soil drench, and drilled. The results showed that BOB020 had an earlier harvest time (60 days) compared to BOB017 (71 days). The soil drench fertigation method showed the highest curd weight (351.64 g), curd diameter (14.65 cm) and yield (12.39 t.ha-1) compared to the other two fertigation methods. The BOB017 genotype fertilized with soil drench method resulted in the highest B/C ratio (3.32). The study concluded that growing cauliflower using the soil drench method resulted in the optimum growth of cauliflower, high yield and net income.

Regional innovation and firm performance

This paper uses novel measures of innovation and engagement, at the county level in the US, to frame the relationship between innovation levels in a region and the performance of publicly traded firms in those areas. In theory, an innovative community should foster improved firm performance, reinvestment, and continued growth for both the firm and the community, feeding back into firm performance, a virtuous cycle. Our results suggest that inventive activity within a county, measured using a patent index, is positively related to revenue and profit growth, while technical creativity, measured using an index of employment in technical fields, is associated with process improvement and net income growth. Finally, the opportunity to collaborate and interact socially within a community is positively associated with firm performance measures, but with only weak statistical significance for the publicly traded firms in the sample.

The Good, the Bad, and the Ugly: Impact of Negative Interest Rates and QE on the Profitability and Risk-Taking of 1600 German Banks

The recent negative interest rate policy (NIRP) and quantitative easing (QE) programme by the ECB have raised concerns about the pass-through of monetary policy. On the one hand, negative rates could lead to declining bank profitability making an expansionary monetary policy contractionary. Also, if interest rates are too low for too long banks could be induced to take too much risky credit. On the other hand, several economists argue that there is nothing special about negative interest rates per se. This paper uses a large micro level data set of the German bank universe to examine how banks behave in this uncharted territory. The evidence found suggests that bank’s business model, i.e. the share of overnight deposits, plays a crucial role. While some banks may benefit in the short run via for instance reduced refinancing costs or lower loan loss provisions, many banks with high deposit ratios face lower net interest income and lower credit growth rates. If continued for too long QE and NIRP erode bank profits for most banks eventually.

Franchising model for expansion of the international travel business

The hotel sector of the travel industry is the leader according to the indicator of economic growth, which is observed in both developed and developing countries. Even under the economic instability and global natural disasters, the industry has seen growth in recent years. The franchising model for expanding activities is central to all successful hotel chains.The article deals with the franchising model for the travel business expansion and the economic performance of hotel chains such as Marriott International, Wyndham Hotels, and Hilton. They hold a prominent place in the global hotel business, have a steady tendency to expand their business, hold high positions in the ranking of the best franchises in the world and have been recognized by experts.The main risks for the franchisor and franchisee are determined when making a decision on the expansion of the international travel business, which must be taken into account when developing new markets for hotel chains. The main advantages of the franchising model of expansion, which promote understanding between the parties of the franchise agreement, dynamicize hotel chains expansion and allow for reducing their expenses and increasing incomes.It was found that the growth of net profit and total income in the indicated hotel chains was due to the increase in the number of rooms in franchising and the positive dynamics of franchise income. A more dynamic pace occurred after the crisis growth in revenues from the franchisee compared with the managerial model. A closer relationship between revenues and key financial indicators has been proved when using a franchising model.

No Buybacks Guidance in Corporate Governance Principles

13 high profile CEOs of U.S. companies secretly worked for one year to develop corporate governance principles that would serve as a future pathway. They advocated their resulting document as being detailed and tough-minded with commonsense recommendations and guidelines about the roles and responsibilities of boards, companies, and shareholders. However, these corporate governance principles did not provide any specific guidance or perspective on the use of common share buybacks to improve earnings per share, which has become a popular form of earnings management by U.S. public companies. This paper analyzes the buyback strategy of these CEOs’ own public companies plus a sample of their major competitors. For these well-known major U.S. companies, the common stock buyback strategy to improve the profitability performance of net income growth to a larger EPS growth occurred 61% of the time for annual growth periods and 100% of the time for the four-year growth period. Accordingly, this paper recommends buybacks guidance for corporate governance, consistent with public reporting and management compensation guidelines.

Withdrawn: Do Aggregate Earnings Components Predict GDP Growth Better? An International Setting Comparison

This study investigates the usefulness of aggregate accounting earnings and their components to predict GDP growth.This study shows evidence that net income, net operating income, other comprehensive income, and net income change at aggregate level could predict GDP growth. This study splits sample into developed and developing countries.Almost all of aggregate earnings components could predict GDP growth in developed countries.On the contrary, only other comprehensive income and net income growth could predict it in developing countries. Moreover, sensitivity analysis shows evidence that the predictive power of accounting numbers are more consistently found in developed countries. It implies that all economic activities of firms listed in developed countries’ stock exchanges fully reflect to that of macro economy. This reflection is better than those of in developing countries. We infer that the value relevance of accounting earnings and their disaggregation have reached not only in the capital markets but also in the national macroeconomy level.Indeed, this prediction seems dominantly to be accurate in developed countries only.

Analysis of financial soundness of manufacturing companies in Indonesia Stock Exchange

This study aims to provide information to the issuer and Bapepam and Indonesian Institute of Accountants with additional important information content of ratings and financial soundness of the indicators that do not harm investors. This is an explanatory and descriptive nature of causality using quantitative methods, using all companies listed on the Indonesia Stock Exchange (ISE) taken as the sample. The data were analyzed using discriminant statistical analysis tools are processed with SPSS. The results showed that the level of financial soundness of the manufacturing industries listed on the ISE such as 23 (62%) Companies Current Asset Growth (CAG) is low as well as Fixed Asset growth (FAG) 28 (76%) companies is still low, Equity Growth (EqG) by 27 (73%) the company, Revenue growth (RG) 27 (65%) companies and Net Income Growth (NIG) 35 (95%) firms. Two manufacturing companies have a very high NIG, thus, NIG average is very high. The seven models of financial soundness were tested based on the growth of corporate finance such as CAG, FAG, LG, EqG, RG, ExG and NIG. Only one model is not significant, the model RG, while the other model is a significant, with a significant difference be-tween the growths rates of the sound and unsound corporate finances industry groups.

A dynamic model of bank valuation

We present a model of price-to-book (PB) valuation for banks that establishes a dynamic relationship between the PB valuation of equity and the cost of equity, expected growth of net income, and modified dividend payout ratio.