Non-financial Public Companies Research Articles

Financial performance of Polish energy companies in the pre-COVID-19 pandemic decade

The energy sector plays a crucial role for the socio-economic development all over the world. The aim of this study is to synthetically assess the financial efficiency of public energy companies (in this study represented mostly by state-owned companies or their subsidiaries) and compare them with other non-financial public companies (usually private) in the relatively stable decade of 2010–2019 which preceded the COVID-19 pandemic. Our analysis focused on nine energy companies in Poland listed continuously throughout the study period whose complete financial data was available in the Notoria Serwis database. The annual financial performance of each of them was measured by a custom synthetic vector measure of financial efficiency, constructed using 14 financial ratios describing liquidity, leverage, efficiency, profitability and market values as discriminant variables. The results demonstrate that energy companies in Poland do not belong to the cluster of the most financially efficient companies in terms of the applied vector measures. The performance of Lotos and Kogeneracja was improving in the analysed 10-year period, whereas in the case of Tauron, Enea and PGE, it was gradually deteriorating.

A LASSO-BASED ANALYSIS ON VALUE RELEVANCE OF ACCOUNTING INFORMATION IN THE BULGARIAN CAPITAL MARKET

The aim of this study is to examine the value relevance of accounting information, specifically the influence of accounting information on the share prices of non-financial public companies listed on the Bulgarian capital market. The data set contains twenty accounting variables and the stock prices of twenty public Bulgarian companies. The analysed period is 01.01.2015 – 31.12.2022. Descriptive statistics and Least Absolute Shrinkage and Selection Operator (LASSO) regression model are applied. The empirical analysis results show that accounting information affects share prices of the examined companies from 2015 to 2022. Addionally, LASSO regression model is an appropriate model for identifying significant accounting information variables that influence stock prices. The findings of the study offer practical implications for various stakeholders, including investors, policymakers, and financial analysts.

Cash holding, economic uncertainty and investment: Evidence from ASEAN countries

This research observes the effect of uncertainty on corporate cash holding. Uncertainty drives up asymmetric information problems, increasing companies' external capital costs. As a result, companies prefer to accumulate cash to protect their investment capabilities in the future. The study uses a sample of non-financial public companies in six ASEAN countries, such as Malaysia, the Philippines, Thailand, Singapore, Indonesia, and Vietnam, from 2008 to 2021. The study uses a total of 34,359 firm-year observations. The research method employs a fixed-effect panel data model with Driscoll-Kraay standard errors. The findings of this study indicate that economic uncertainty can cause companies to accumulate their cash holdings. Furthermore, cash holding can reduce the impact of economic uncertainty on decreasing corporate investment decisions. This research contributes to the literature by showing the relationship between economic uncertainty, cash holdings, and corporate investment in the context of ASEAN countries.

ASSESSING THE IMPACT OF THE SARS-COV-2 PANDEMIC ON EARNINGS MANAGEMENT BEHAVIOUR IN POLAND

The purpose of this paper is to investigate the impact of the SARS-CoV-2 pandemic turbulence on the extent and intensity of earnings management practices according to the opinions of representatives of non-financial companies listed on the Warsaw Stock Exchange (WSE). Methodology. This study is based on the method of standardised computer-assisted questionnaire interviews (CATI). The research sample consisted of 37.1% of all companies indexed on the WSE Main Market that do not operate in the banking, insurance or capital market services sectors. The target respondents were managers, employees of financial and accounting services and other persons authorised by the company's managerial staff representatives. Results. The survey findings showed that the economic turbulence caused by the SARS-CoV-2 pandemic contributed to an increase in earnings management activities in public companies. Respondents who reported that the companies they represented deliberately manipulated earnings were much more confident about the negative impact of the pandemic crisis on the quality of reported data. An interesting finding of the research is that respondents who had experienced earnings management in their professional practice were more likely to believe that the pandemic had distorted the credibility of reported earnings. Finally, the study provided statistical evidence that respondents from larger companies were more likely than respondents from smaller companies to say that the economic crisis related to the SARS-CoV-2 pandemic contributed to an increase in earnings management activities. Practical implications. This investigation may draw the attention of market participants to the deterioration in the financial reporting of non-financial public companies during the SARS-CoV-2 pandemic. The intensification of profit manipulation may not only distort the current perception of the company's economic performance, but also deteriorate the future value of companies. In addition, the findings provide valuable information for statutory auditors, as they highlight potential audit risks that may arise with the onset of the SARS-CoV-2 pandemic. Value/originality. Unlike most studies on the subject, this research does not focus on the estimated values of discretionary accruals, but on the knowledge and experience of financial professionals who are familiar with the specifics of the Polish capital market. An original contribution to the literature is the inclusion in the study of potential factors that could influence the respondents' perception of the impact of the consequences of the SARS-CoV-2 turbulence on the pattern and intensity of the earnings management phenomenon.

The Influence Of Risk Management Committee And Family Ownership With Company Performance In Indonesia: Busy Directors As Moderating Variable

Corporate risk management and corporate governance have become important in managing the company. Both are believed to be able to reduce agency problems, between company owners and managers or between shareholders. Using a panel data regression analysis model, a sample of 602 non-financial public companies registered in Indonesia in the 2019-2021 period, this study focused on testing the effect of the existence of the Risk Management Committee and family share ownership on company performance ( ROA). The study also used busy directors as a moderating variable. The results showed that the existence of the Risk Management Committee had a positive and significant relationship with ROA. But family ownership has a negative and significant relationship with ROA. Meanwhile, the presence of commissioners who concurrently hold positions in other companies at once or busy directors, does not significantly affect the relationship between the Risk Management Committee and family ownership and the company's performance.

NOMINATION AND REMUNERATION COMMITTEE AND FIRM PERFORMANCE: EVIDENCE FROM JORDAN

The study examines how the composition of the nomination and remuneration committee (NRC) affects firm performance in Jordanian publicly traded companies. The study consists of 68 non-financial public companies listed on the Amman Stock Exchange for the years between 2017 and 2020. This study uses four different statistical models to analyse the panel data including fixed effects, pooled OLS, random effects, and robust standard errors. The findings show that committee size, overlap, and expertise have a positive association with Tobin's Q. On the other hand, the committee's independence, meetings, and female membership have an insignificant impact on Tobin's Q. Also, the committee's independence and size have a positive and significant effect on ROA, while the committee's expertise, meetings, overlaps, and female membership have no significant effect on ROA. This study contributes to the Jordanian corporate governance structure, including the composition of the nomination and remuneration committees, and contributes to the insights of regulators and shareholders into the role of NRC features in a developing market, such as Jordan, and their impact on firm performance. This study focuses on setting up an NRC for non-financial firms, it is suggested that for certain firms, but not all public corporations in Jordan and other developing countries. Therefore, exploring whether similar findings would be achieved if financial firms were required to establish such a committee would be a topic of interest for researchers.

Determinants of Carbon Emission Disclosure: A Study on Non-Financial Public Companies in Indonesia

This study investigates the direct and indirect associations between carbon emission disclosure with firm size, financial performance, and environmental performance. The samples were selected using a purposive technique and obtained 113 observations. Data are collected by downloading sustainability reports, annual reports, and annual financial statements and analyzed using WarpPLS 7.0 software. The authors find that firm size has a negative influence on financial performance. Firm size has a positive influence on environmental performance and carbon emission disclosure. Financial performance and environmental performance do not affect the carbon emission disclosure and do not mediate the effect of firm size on carbon emission disclosure.

The Nexus between Corporate Financial Ratio and Price Earnings Performance: Evidence from President Election Period in Indonesia

This research aims to obtain an empirical overview of the influence of financial performance on stock prices in situations of political uncertainty in Indonesia. Our sample includes all non-financial public companies listed on the Indonesia Stock Exchange from 2011 to 2019, totalling 1,899 company-years. This study uses fixed-effects regression to test the hypothesis. The researchers found that financial performance positively and negatively affects stock prices. Specifically, we found a negative relationship between financial performance proxied by Return on Equity and Debt to Ratio. In contrast, liquidity, return on Assets, and Net Profit Margin have a negative effect on financial performance. Furthermore, our evidence becomes unique when in conditions of political uncertainty, where more financial performance has a negative impact on stock prices. This study provides practical and theoretical implications to fill gaps in previous literature regarding financial performance and its influence on stock prices.

THE EFFECT OF AUDIT QUALITY AND GOOD CORPORATE GOVERNANCE TOWARDS DIVIDEND POLICY IN PUBLIC COMPANIES IN INDONESIA

Abstract - The purpose of this study is to find the relationship between audit quality and good corporate governance (GCG) on dividend policy. Where the supervision provided by the company's independent auditors and independent board of commissioners has an impact on the returns received by investors in the form of dividends. The study was conducted using purposive sampling technique, taking 141 samples of non-financial public companies in Indonesia from the period of 2017-2019. The data were processed using the STATA program. The results of this study show evidence that the audit quality variable with the proxy of the Big 4 public accounting firm has a positive and significant effect on dividend policy. Which may be resulted from a better quality of supervision thus reducing agency conflicts. However, for the GCG variable, there is no evidence of an influence on dividend policy which may be resulted from different proxy variables.
 Keywords: Audit Quality; Good Corporate Governance; Dividend Policy; Independent Commissioner

Is CEO Power Important in The Relationship Between Corporate Governance and Firm Performance in Jordan?

This study presents a conceptual framework for understanding a firm's performance is impacted by the nomination and remuneration committee (NRC), risk management committee (RMC) and the moderating role of CEO power. The research sample will consist of 68 non-financial public companies that were listed on the Amman Stock Exchange between 2017 and 2020. Tobin's Q and ROA will also be used to assess firm performance. While NRC, RMC, and CEO power data will be manually obtained from yearly reports. The study will evaluate the panel data using four alternative statistical models: fixed effects, random effects, pooled OLS, and robust standard errors. This study expecting that NRC and RMC will positively affect the business performance. Further, anticipating that the CEO power positively moderate the relationship between corporate governance (NRC and RMC) and firm performance. This study fills a gap in the literature by evaluating the association between NRC and RMC traits and firm performance because research on the topic in Jordan has been ignored. This study will analyse the moderating influence of CEO power in the connection. The results of this study can be somewhat applied to the contexts of other developing countries due to the common features of the business environment. This study is also the first to be conducted in Jordan since the corporate governance laws were changed in 2017 to include certain NRC and RMC requirements.

UKURAN PERUSAHAAN, PROFITABILITAS, POLITICAL COST, TIPE INDUSTRI, DAN KINERJA LINGKUNGAN TERHADAP ENVIRONMENTAL DISCLOSURE

Environmental disclosure is the disclosure of information related to the environment in the company's annual report and sustainability report. Research related to environmental disclosure is developing quite rapidly, but still produces various findings. This study aims to determine and examine the effect of company size, profitability, political costs, type of industry and environmental performance on environmental disclosure. The population in this study are non-financial public companies listed on the Indonesia Stock Exchange (IDX) and registered as PROPER participants for 2017-2021. The sampling method in this study used a purposive sampling technique. The unit of analysis is the annual report, corporate sustainability report and list of PROPER participants for 2017-2021, totaling 177 population. The data analysis method used is multiple linear regression analysis. The test results show that profitability and environmental performance have a positive effect on environmental disclosure. However, company size, political costs and type of industry have no effect on environmental disclosure.

Applying artificial intelligence techniques for predicting the environment, social, and governance (ESG) pillar score based on balance sheet and income statement data: A case of non-financial companies of USA, UK, and Germany

Due to globalization, environment, social, and governance (ESG) issues have gained importance over the last few decades. ESG is a worldwide issue, which clarifies that organizations throughout the world are lacking in contribution to the environment, society, and corporate governance characteristics for sustainable development. The problem of ESG spread over all stakeholders needs to be addressed. In this regard, rating agencies also have a close eye on ESG issues and have developed the methodology of score that aims to provide disclosure on ESG metrics which, in return, help investors and asset managers better differentiate between responsible and irresponsible companies. The ESG score has become an important tool among asset managers but is highly questioned in terms of reliability. The study objective was to develop machine learning algorithms to assess how balance sheet and income statement data impact the Thomson Reuters ESG score for non-financial public companies of USA, UK, and Germany from 2008 to 2020. In addition, the study also has an objective to assess which machine learning (ML) algorithm better predicts the ESG score using structural data, that is, return on assets (ROA), return on equity (ROE), earning per share (EPS), earnings before interest and taxes (EBIT), dividend yield, and net sales. The results concluded that balance sheet and income statement data are critical in explaining the ESG score, and the ANN algorithm outperforms with minimum RMSE and MAE values. All in all, the results of the study, based on the concept of artificial intelligence, bring suggestion for improvement to regulatory bodies, researchers, academia, practitioners, publicly listed companies around the globe, and last but not the least to the US, UK, and Germany markets. Moreover, it also provides suggestions for up-to-date compliance of ESG-relevant activities for boosting the firm performance.

Analysis of factors that influence the companies’ market value in England, France, and Germany. How can managers maximize such value?

One of the classic issues in business administration is whether managers can maximize profit. Thus, this article aims to identify the causal factors regarding the maximization of companies’ market value to subsidize decision-makers. The sample was extracted from the Capital IQ database and formed of nonfinancial public companies from Germany, France, and England, considering the period from 1999 to 2019, with quarterly frequency. The study finds theoretical support from market-to-book decomposition concepts as in Rhodes-Kropf, Robinson, and Viswanathan (2005), and uses the classical theory decision model with hypotheses proposed by Lindenberg and Ross (1981), Hirschey and Wirchem (1984), Habib and Ljungqvist (2005), Hertzel and Li (2010), and Belenzon (2012). The research adopted a t-1 period lag in the independent variables in relation to the dependent variable to demonstrate the result of actions of independent variables in the dependent variable in subsequent periods. Subsequently, correlation and regression analyses were performed with panel data. The results show that the management of tangible and intangible assets, goodwill, revenue, Ebitda, return on assets, research and development, advertising, Capex, and return on equity contribute to increasing the companies’ market value, and they can be maximized through good management. Therefore, because these variables are manageable, it is possible to infer that managers are in the position to maximize companies’ market value.

Board of directors characteristics: How they are related to ESG rankings and value of Russian companies

Goal: the goal of this paper is to determine effects of board of directors characteristics on corporate value creation, taking into account ESG (Environmental, Social, Governance) principles. Methodology: the methodological tool applied in this study is an econometric analysis of panel data for 48 Russian non-financial public companies with ESG score provided by Thomson Reuters Eikon in the period from 2015 to 2020. Findings: we have found a non-linear impact of board size on ESG performance, and significant positive impact of board independence on both ESG performance and firm market value. We also find that higher board gender diversity leads to higher corporate ESG score and market value, while higher share of foreign directors does not affect significantly these indicators of performance of Russian companies. Board sustainability committee enhances both corporate ESG performance and market value, board strategy committee contributes to ESG score’s increase as well. Originality and contribution of the authors: our study contributes to the development of academic literature devoted to corporate governance effects on firm’s performance on understudied market, in the context of growing demand for corporate sustainability. Application of our findings will allow to formulate the best practices of corporate governance for market value creation of Russian companies basing on ESG principles.

The Influence of Capital Concentration on Brazilian Non-Financial Public Companies’ Indebtedness Behavior

One of the main financial policies is related to the capital structure to be defined by the companies. For this reason, studies related to factors determining the capital structure have a high priority on the research agenda in finance area. This being so, the proposal is to investigate whether the nature of the company’s shareholding control—family, foreign, state-owned—affects its capital structure. It is the first work that uses real shareholding control. For the development of this research, the publicly traded Brazilian companies listed in B3 are adopted as a sample. The analyzed sample covers 128 Brazilian companies listed in B3, between 2010 and 2017, excluding companies from the financial sector. It is necessary to study each company report to discover last—and true—shareholding control (Reference Forms). To verify the influence of the capital structure, regression models with panel data are used (fixed effect and robustness). The results are consistent with the expected ones: 1) the excessive concentration of family capital impairs indebtedness, which, due to the control loss aversion, reduces the financing by debt; 2) the concentration of foreign capital favors companies’ indebtedness, as they have more efficient management, better access to financing sources and better investment opportunities, and, 3) the concentration of state capital favors indebtedness, since these companies are of government’s interest to maximize the country’s development, and have low capital costs arising from development banks.

Impact of audit committee characteristics and external audit quality on firm performance: evidence from India

PurposeThe purpose of this paper is to analyse the influence of audit committee characteristics and external audit quality on the performance of non-financial public limited companies listed on the National Stock Exchange 100.Design/methodology/approachOne-way random effect panel data regression was applied to 74 non-financial firms in the Nifty 100 from 2014 until 2019. The overall audit committee index and external audit index were built based on the new Indian Companies Act, 2013 and on a review of the literature to capture the impact of the new Act on firm financial performance.FindingsThe outcome of the study revealed that there is lack of evidence to show that audit committee characteristics improve the performance of top Indian non-financial listed firms. However, external audit quality was found to have a significant positive impact on the financial performance of firms as measured by Tobin’s Q, while firm size and leverage were found to have a significant impact on the financial performance of firms as measured by return on assets and return on equity.Practical implicationsThis paper will be greatly beneficial for financial practitioners and policymakers because it provides practical suggestions and recommendations about the types of external audit that are indispensable for the overall effectiveness and performance of firms. The study findings may also aid strategic policy formulation and execution for better corporate governance practices for the purpose of profit and wealth maximisation.Originality/valueTo the best of the authors’ knowledge, to date, no previous research has evaluated the effects of audit committee features and external audit quality on the financial performance of firms in India after the implementation of the new Companies Act, 2013. Hence, this study fills this void in the present literature by examining the overall features of the audit committee and external audit and their impact on firm performance in the setting of India.

Corporate Social Responsibility Disclosure and Cost of Equity of ASEAN-5 Public Companies

This research aims to analyze the influence of corporate social responsibility (CSR) disclosure, leverage, and ownership structure – consisting of institutional ownership, managerial ownership and concentrated ownership – on cost of equity with book-to-market ratio and firm size as control variables. The population was non-financial public companies listed in ASEAN. There was a total of 76 companies obtained using a purposive sampling technique. The data was analyzed using the multiple regression technique. The results show that the data is normally distributed and has met the requirements for using the multiple linear regression models. The findings indicate that the CSR and leverage have a positive and significant influence on cost of equity. Similarly, the institutional ownership also has a positive and significant influence on cost of equity. However, the managerial ownership and concentrated ownership have a negative and significant influence on cost of equity. Meanwhile, the book-to-market ratio has a negative and significant influence on cost of equity. In contrast, the firm size has a positive and significant influence on cost of equity.

Innovation activity impact on adding value to the enterprise: empirical analysis

In the context of economy digitalization corporate innovative activity is one of the main competitive advantages, which should have impact on adding value to the enterprise. The aim of this study is to explore if there is relation between innovation activity level of the Russian companies and their value. Analysis of balanced panel data based on the application of random effects and fixed effects models is used to test research hypotheses. The sample contains 19 Russian nonfinancial public companies (2012-2019). The results of the empirical study demonstrate the positive relation between corporate innovation activity level and company value. The influence of expenditures on staff development (one of the corporate social responsibility (CSR) directions) on the latter is addressed as well, however, no statistically significant result is received in the short run, probably confirmation of a positive relationship can be obtained in the long term. Moreover, impact of general CSR indicator on corporate value can be tested to make further conclusions on the validity of the idea of joint influence of innovation activity and CSR on the value of companies.

Factors affecting the dividend policy of non-financial joint-stock companies in Ukraine

Dividend policy, as part of corporate governance, is largely dependent on the institutional environment in which companies operate. The study aims to determine factors affecting dividend policy in the conditions of the Ukrainian underdeveloped stock market, legal insecurity of minority shareholders, high cost and concentration of capital. For this purpose, hypotheses about the impact of a company’s financial state, size, business risk, and ownership structure on dividend payments were tested using a sample of 58 Ukrainian non-financial public joint-stock companies and applying Interactive tree classification techniques (C&RT). The resulting classification model for predicting dividend decisions correctly classifies 92.86% of companies that paid dividends and 93.3% of companies that did not. The findings, based on the classification tree and importance scale, prove the hypothesis that companies in which individuals and institutional investors have a controlling interest are more likely to pay dividends than other non-state companies. The financial indicators accurately classify only those firms that do not pay dividends, and business risk does not affect classification accuracy at all. The paper substantiates the ways of using the study findings for economic regulation, protection of minority shareholders’ rights, and proliferation of modern corporate governance practices.

Examining The Excess Cash Holdings As An Indicator of Agency Problems

This research aims to examine the implications of excess cash holdings on firm value based on agency theory. Data were obtained from a total sample of 1828 non-financial public companies in Indonesia, with 672 exceeding normal cash holdings using the panel regression techniques. The result showed that excess cash holdings have a negative effect on the firm value which is stronger for more concentrated ownership, for more dispersed ownership and for more financially difficult firms. Overall the empirical finding showed that excess cash holdings acts as a significant indicator of agency problems.