Short-term Financial Performance Research Articles

NÃO HÁ FELICIDADE SEM AFLIÇÃO: IMPLEMENTAÇÃO DE SISTEMAS DE PROTEÇÃO DE DADOS PESSOAIS E VALOR CORPORATIVO

ABSTRACT The commercial exploitation of personal information has raised concerns regarding privacy, illegal data use, and information security, among others. Therefore, personal data protection systems (PDPS) play a significant role, and corporations are the primary enforcers of these systems’ regulation. However, PDPS require significant investment from companies, and there is no consensus regarding the economic outcomes of establishing these systems. This study investigates whether the establishment of PDPS affects short-term financial performance and long-term corporate value. After applying the propensity score matching method, a dataset comprising 912 firm-year observations of e-commerce companies listed on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2020 was selected. The results show that PDPS implementation can improve a company’s short-term financial performance by a) exploring markets and strengthening internal control and b) increase long-term corporate value by strengthening corporate social responsibility. This study offers insights for companies to proactively implement PDPS and strengthen their management of personal data, thereby boosting the overall corporate value. In addition, this study can help governments to develop legislation on national information security and enhance international cooperation, especially for emerging markets.

THE IMPACT OF R&D ACTIVITY ON THE BUSINESS PERFORMANCE OF HIGH-TECHNOLOGY COMPANIES

This paper aims to examine the influence of R&D activity on the business performance of high-technology companies. In order to provide an empirical investigation of the impact of R&D activity on the business performance of high-technology companies, correlation and regression analyses have been utilized.This study discovered that investment in R&D has a positive influence on EBIT, net earnings, EBITDA, and total assets, while its influence on ROA was confirmed to be statistically significant and negative. Additionally, the influence of R&D intensity performance indicator (RDI) on ROA as a short-term financial performance indicator was not confirmed. The study revealed that return on R&D investment (RORDI) has a statistically significant and positive influence on ROA in the current, observed year.The evaluation of the obtained results can be a basis for drawing more detailed conclusions, contributing to the future R&D strategy and existing literature, and emphasizing the importance of R&D investment for various business performances.The originality of this study is reflected in the comprehensive analysis of the influence of specific indicators of R&D activity, such as RORDI, on the business performance of high-technology companies. This paper is also beneficial because none of the existing studies have explored the impact of investment in R&D on EBITDA.

Board Membership Changes And Financial Performance: The Moderating Role Of Family Firms

The aim of this study is to examine a possible relationship of corporate financial performance and board membership changes. As a consequence, whether too little or too much board membership changes would produce a detrimental impact to financial performance. Furthermore, this study investigated whether this effect is more pronounced in family firms over non-family firms. Based on the agency theory and stewardship perspective, the results indicate that board membership changes are significant for family firms towards short-term financial performance indicators, with positive effect above a certain interval, though it signaling to the market may not be relevant. Also provides insightful examination of a specific corporate governance issue that is valuable both for academics and practitioners.

PENGARUH QUICK RATIO DAN EARNING PER SHARE TERHADAP HARGA SAHAM PADA PERUSAHAAN PERTAMBANGAN BATU BARA YANG TERDAFTAR DI BURSA EFEK INDONESIA

The purpose of this study is to determine and analyze the effect of quick ratio and earnings per share on share prices in coal mining companies listed on the Indonesia Stock Exchange (IDX). The analytical tool used in this study was multiple linear regression. The total population of 21 companies or all coal mining companies listed on the IDX, which is sampled in this study is as many as 6 stone mining companies listed on the IDX and companies have data to calculate Quick Ratio (QR) and Earning Per Share (EPS), as well as available annual financial report data published during the research period 2011-2016 in www.idx.co.id. The results showed that the independent variable Quick Ratio (X1) had a negative and significant influence on stock prices, while Earning Per Share (X2) had a positive but not significant influence on Coal Mining Companies listed on the IDX. The higher the Quick Ratio level indicates its short-term financial performance, the better because the company is considered capable of paying its obligations using cash, tradable securities, and receivables

Impacts of internal R&D on firms’ performance and energy consumption: Evidence from Ethiopian firms

In recent decades, with the rapid development of the knowledge economy and science, countries have embraced technical innovation and have gradually increased investment in research and development (R&D). A vast literature indicates that the relationship between R&D and firm performance is highly complex. The evidence suggests that R&D positively influences firm performance, yet findings on the process by which this happens are mixed. Rigorous analyses are required on how R&D investments affect energy consumption. This study explores the impact of R&D investment on the performance and energy consumption of 476 firms in Ethiopia by employing a combination of fixed-effect, propensity score matching, and endogenous treatment effect estimation methods. The empirical results reveal that investment in R&D positively influences both innovation and long-term financial performance but negatively impacts short-term financial performance and energy consumption. The results also show that the impacts of R&D activities vary significantly across different categories of firms, confirming that heterogeneity may be an issue among the firms considered. The results also indicate that the availability of credit is a more important moderating factor in the relationship between R&D investment and firm performance than the legal system is. These results have important implications for firms with growing R&D operations, especially those in developing countries such as Ethiopia. Ethiopian firms should invest more in R&D activities, such as in fundamental and applied research, to improve performance and enhance competitiveness.

How Can Funding Drive Firm’s Performance in the In Vitro Diagnostics Industry?

Due to the increased need for the efficient use of public funds and the importance of private investment, there have been many studies on the effects of these factors on corporate performance. However, few studies have been conducted based on an integrated perspective. In addition, most studies have investigated cases in leading countries and have rarely studied latecomer countries. Therefore, this study investigated the step-by-step effects of government support on firm performance (innovation performance, venture capital (hereafter VC) investment, and financial performance) based on the data on in vitro diagnostic (hereafter IVD) firms in Korea. In particular, we demonstrate the sequential effects of these variables with a time lag. The results of the panel regression analysis indicate that government R&D support improved the innovation performance of IVD firms, but this increased innovation performance did not attract VC investment. Meanwhile, VC investment has a positive impact on a firm’s financial performance. These findings have policy implications and suggest that government support plays a pivotal role in a company’s innovation performance, and thus continuous investment is required. However, innovation performance negatively affects short-term financial performance, and thus technology commercialization should be supported.

Research on the Effects and Factors of CSV Activities by Sector in Japanese Firms: Analysis Considering the Relationships with Management and Communication Strategies

In this study, we examine whether social and corporate values are improved in firms conducting CSV (Creating Shared Value) activities in Japan, as well as determining the factors affecting such improvement. A total of 218 firms were selected from those conducting CSV activities in the manufacturing industry from 2019 to 2021, according to Toyo Keizai data. The following key results were obtained: first, CSV activities increase social value, but do not improve short-term financial performance. Second, the effects on financial performance and factors affecting the improvement of social values vary from sector to sector. Third, changes in sales is a common factor affecting performance. Fourth, communication strategies for the implementation of CSV activities differ between material and assembly industries; for example, materiality plays an important role for human resource utilization in material sectors, while in-house branding plays an important role in assembly sectors. Our research findings contribute to the understanding of the need to take different measures to improve social value among different sectors of the manufacturing industry.

Green research intensity and diversified performance: the moderating role of environmental regulation

PurposeWhile implementing green innovation-driven strategies when facing growing grim environmental problems and the realistic demands of achieving high-quality development is increasingly urgent, changing abruptly is inevitably detrimental to the smooth functioning of social and economic development. Restrained by resources, innovation-driven strategy is a huge strategy for an organization to shift from traditional technological innovation to green innovation. Supports and implementation in green technology investment would necessarily crowd out other business investment and lead to reduction of innovation outputs and mount of financial uncertainty. Under the guidance of harmonious balance, the equilibrium allocation between green research and non-green counterpart is badly needed to be addressed for decision-makers inside and outside the organizations. The differentiated inputs of them would lead to different effects on organizational performance in practice.Design/methodology/approachThe authors first conducted a Hausman test on green research intensity (GRI) and innovation performance, economic performance, social performance, and environmental performance, respectively. Adopting the fixed effects model for estimation seems accurate, if there is no significant heteroscedasticity shown in the BP test. The authors then adopted the least square dummy variable method to handle individual heterogeneity (Xia et al., 2020). After controlling the industry effect and time effect simultaneously, the results were consistent with that of fixed effects model, thereby eliminating the impact of heteroscedasticity.FindingsThe authors construct a multi-dimensional performance system—innovation performance, economic performance, social performance, and environmental performance—to probe into the influence of GRI from the resource-based view and allocation theory. Different performance does not benefit equally from increasing the intensity of green research. Performance increase may squeeze out the quantity of total innovation but can compensate quality for knowledge spillovers of green technology. The organization's growth and long-term value may be beneficial from the increase, but not the short-term financial performance. While the relationship between GRI and social performance has the characteristic of reverse U-curve, there has to be some scale of green research to gain considerable and nonlinear environmental performance. Low level of green research may increase pollution until green research has cross over the inflection point. These relationships are intensely moderated by the environmental regulation.Research limitations/implicationsBecause of the focus of this study is on the organizational performance of green research, the analysis comes with some limitations that should be addressed in future research. Data were inter-professional, with large enterprises and small businesses innovating green technology at the same time. Though the hypotheses presented here were grounded in existing theoretical rationale, the generality of this study cannot be assumed. Multi-performance of green activities in small- and medium-sized businesses should be further explored. Additionally, concrete index of the corresponding evaluation system constructed here contribute more to practical activities of green innovation. Refinement of synergy performance index is the task for future work. Further, grounded in Chinese context, the authors' results could be compared with other scenario with institutional heterogeneity to provide detailed evidences for institutional theory. Future studies could also move forward to longitudinal case study to delicately investigate the performance differentiation of green research when in different development stage.Originality/valueFirst, what and how the authors do is novel as the authors use listed Chinese manufacturing companies to probe into the complex relationship between GRI and multiple performance rather than discussing the performance of green innovation input from a single perspective merely. Second, the authors systematically define the performance as economic performance, environmental performance, social performance and innovation performance in depth, which consider adequately the tangible and intangible value as well as internal and external benefits of green research. And finally, in the context of environmental regulation, the study discusses the differentiation of the increase of green research intensity from the perspective of resource constraints, providing reference for optimizing the resource allocation in green and non-green research and solving the decoupling between earnest social appeal and sluggish or reluctant green behaviors.

Exploring the Role of Environmental Regulation and Technological Innovation in Financial Performance: Evidence from Chinese Heavy-Polluting Industry

Environmental regulation is an important guarantee to realize the balanced development of economy and environment, and is the policy guidance of the government to the resource utilization of companies. Environmental regulation will make companies increase costs, and also promote companies to explore technological innovation. How to reverse the negative cost effect of environmental regulation and improve financial performance is a problem that the government and companies need to think about together. Based on the data from 2015 to 2019 of China’s heavy-polluting industry of listed companies, this paper analyzes the impact of environmental regulation on financial performance. The results show that: (1) environmental regulation inhibits firms’ short-term and long-term financial performance. Environmental regulation has formed the negative effect of cost crowding out; (2) environmental regulation positively affects technological innovation. Environmental regulation can stimulate companies to actively explore technological reform to cope with the requirements and restrictions of environmental regulation policies; (3) technological innovation is not significantly negatively correlated with corporate financial performance. Technological innovation input cannot directly lead to the improvement of financial performance in the current period; and (4) technological innovation positively mediates the relationship between environmental regulation and financial performance. That verifies a weak “Porter Hypothesis”. “Innovation compensation effect” exists, and technological innovation can partially offset “cost crowding out effect” and slow down the inhibition relationship of environmental regulation on financial performance, but the innovation effect does not offset the environmental cost. According to the research results, environmental regulation still has a negative effect on the financial performance of listed companies in China’s heavy-polluting industries. The government should formulate strict and stringent environmental regulation policies, guide companies to rationally use resources and protect the environment. Instead of passively responding to policies, companies should actively seek new technologies and alternative sources of energy. Companies try to amplify the compensation effect of technological innovation, reduce the cost crowding out effect of environmental regulation, and improve their value.

Research on the Impact of Actual Tax Bearing Rate on the Financial Performance of Enterprises.

This paper is based on financial data analysis of 241 listed pharmaceutical manufacturing enterprises in China, we study the different effects of different tax reduction policies on the financial performance of enterprises in the short term and long term. Through the verification of practical examples, it could be found that the implementation of a tax reduction policy can indeed play a positive role in the financial performance of enterprises, and the reduction of income tax significantly improves the short-term financial performance of enterprises. However, the tax reduction of turnover tax significantly enhances the long-term financial performance of enterprises, and the effect of tax reduction on the financial performance of state-owned enterprises is better than that of non-state-owned enterprises. Generally speaking, tax reduction policy has a better effect on the financial performance of non-state-owned enterprises and enterprises in central and western regions than state-owned enterprises and enterprises in eastern regions.

Short-Term Financial Consequences of Top Managers Negative Personal Behaviors

Negative personal behaviors that happen outside of top managers’ professional roles are becoming more frequently reported in the media and are having an impact on firms. Nevertheless, this phenomenon is underexplored, with little theoretical development, and mixed empirical findings. We rely on signaling theory to suggest that top managers, as reliable decision-makers of the firm, with their negative personal behaviors disclose information that investors find valuable about the quality and intent of the management of the firm. Furthermore, we use managerial and organizational reputation as moderators that partially explain variations on the reaction of the investors. Using a sample of 126 negative behaviors of managers from publicly traded firms in North America, we found that those behaviors that are more proximal to the job of the top manager have a higher impact on the short-term financial performance, while this relationship is moderated by managerial reputation, but not by organizational reputation. We discuss important implications of the findings for practice and theory.

Beneficial or Detrimental? The Relationship Between Mandatory CSR Disclosure and Firm Performance

Using a sample of listed Chinese companies for the period 2003–2015, this study investigates the relationship between mandatory CSR disclosure and financial performance. To better clarify the mechanism between mandatory CSR disclosure and financial performance, this paper employed a dual model of financial performance, that is, short-term and long-term financial performance. The results suggest that mandatory CSR disclosure has a negative impact on short-term performance, but a positive impact on long-term performance. Moreover, this study found that corporate environmental investments mediate the relationship between mandatory CSR disclosure and short-term firm performance; the community-related, employee-related, and environmental CSR strategies mediate the relationship between mandatory CSR disclosure and long-term firm performance. The implications and future research directions are discussed.

Abnormal CSR and Financial Performance

This study develops a corporate social responsibility (CSR) measure for abnormal CSR. Based on a microeconomic framework, we argue and show that firm-level variables determine a firm-specific, normal (expected) level of CSR performance, where the marginal costs of CSR equal its marginal benefits. Any deviation from these equilibrium points is a proxy for abnormal CSR, which is negatively related to a firm’s short-term financial performance (i.e., profitability). Hereby, larger values result in proportionally larger decreases in financial performance (inverted U-shape). We conduct our empirical analyses using cross-sectional CSR performance data for U.S. listed companies from 1991 to 2013. Further analyses reveal that this negative effect of abnormal CSR exists for both positive and negative abnormal CSR. Our results hold for alternative measures of firm and CSR performance, an instrumental variable regression, and propensity score matching. Our model could serve as a first indicator for abnormal CSR for investors and other stakeholders.

Does Proactive Green Technology Innovation Improve Financial Performance? Evidence from Listed Companies with Semiconductor Concepts Stock in China

Academia and business alike are paying increasing attention to innovation in green technology due to the potential environmental and financial performance benefits. However, a limited amount of research has been carried out on the effect of proactive green technology innovation on corporate financial performance. This study examines the effects of two dimensions of proactive green technology innovation, namely, proactive green process innovation and proactive green product innovation, on corporate financial performance. Moreover, the moderating role of absorptive capacity on these relationships is introduced. The proposed hypotheses were tested empirically using a dynamic panel dataset of 126 Chinese listed semiconductor concept stocks from 2010 to 2020 and a difference-GMM approach. It was found that proactive green process innovation has a significant positive effect on both short-term and long-term corporate financial performance. Moreover, proactive green product innovation has a significant positive effect on long-term corporate financial performance. However, it does not improve short-term corporate financial performance. In addition, absorptive capacity has a positive moderating effect on the relationship between proactive green process innovation and both short-term and long-term corporate financial performance, and shows a positive moderating effect on the relationship between proactive green product innovation and long-term financial performance. However, it has a significant negative moderating effect on short-term corporate financial performance. Thus, we suggest that firms adopt more supportive proactive green technology innovation practices in order to improve their financial performance.

The Impact of Intellectual Capital Disclosure and Type of Ownership on Evaluation of a Company's Financial Performance after IPO

This study aims to determine the effect of Intellectual capital Disclosure (ICD) and the type of ownership on financial performance after the IPO in short and medium period. This study uses a quantitative approach and multiple regression analysis. Data was obtained from prospectuses and financial statements of companies that conducted IPOs on Indonesia Stock Exchange for the period 2000-2015. The population in this study was all companies that conducted initial public offerings from 2000 to 2015, as many as 316 companies and 234 companies were selected as samples using purposive sampling methods. The results showed that Intellectual Capital Disclosure had a significant positive effect on short-term (1-year) and medium-term (3-year) financial performance post-IPO, however, type of ownership has no effect on short or medium-term financial performance post-IPO. These results show that the degree of intelectual capital disclosure can control the company's performance for the better. This provides broad insights for decision makers.

CSR contracting and performance-induced CEO turnover

Motivated by the rise of linking CEO compensation to corporate social responsibility (hereafter, CSR contracting), we examine the impact of CSR contracting on CEO performance-induced turnover. Using a sample of S&P 500 firms with hand collected information on the use and substantiveness of CSR contracting from proxy statements between 2004 and 2018, we find that CSR contracting firms are associated with reduced turnover–performance sensitivity. Furthermore, CSR contracting's effects hold regardless of CEO power, although the impact appears to be concentrated in observations both during and after the global financial crisis, in firms with superior CSR ratings, and in those managed by more able CEOs. Channel tests reveal that non-transient institutional ownership and shareholder voting support increase following CSR contracting. Jointly, these patterns are consistent with the notion that CSR contracting helps signal a firm's long-term strategies, attract investors for whom social returns are an issue, and build trust between a firm and its investors, thereby reducing the importance of short-term financial performance related to CEO dismissal decisions.

Impact of External Environmental Dimensions on Financial Performance of Major Teaching Hospitals in the U.S.

Teaching hospitals have a unique mission to not only deliver graduate medical education but to also provide both inpatient and ambulatory care and to conduct clinical medical research; therefore, they are under constant financial pressure, and it is important to explore what types of external environmental components affect their financial performance. This study examined if there is an association between the short-term and long-term financial performance of major teaching hospitals in the United States and the external environmental dimensions, as measured by the Resource Dependence Theory. Data for 226 major teaching hospitals spanning 46 states were analyzed. The dependent variable for short-term financial performance was days cash on hand, and dependent variable for long-term financial performance was return on assets, both an average of most recently available 4-year data (2014–2017). Utilizing linear regression model, results showed significance between outpatient revenue and days cash on hand as well as significant relationship between population of the metropolitan statistical area, unemployment rate of the metropolitan statistical area, and teaching hospital’s return on assets. Additionally, system membership, type of ownership/control, and teaching intensity also showed significant association with return on assets. By comprehensively examining all major teaching hospitals in the U.S. and analyzing the association between their short-term and long-term financial performance and external environmental dimensions, based upon Resource Dependence Theory, we found that by offering diverse outpatient services and novel delivery options, administrators of teaching hospitals may be able to increase organizational liquidity.

Sustainable Investment: Consequences for Psychological Well-Being

This paper sets the stage for research on sustainable investment (SI) related to psychological well-being (PWB). It recognizes the threat of current global consumption levels to exceed the planetary boundaries and asks what roles financial markets may play in reducing these threats without compromising PWB. SI integrates environmental (E), social (S), and governance (G) factors alongside financial factors in investments in company shares and bonds as well as through active engagement in companies. Barriers to ESG integration include lower short-term financial performance, higher financial risks, and insufficient ESG screening by investors. A brief review of PWB shows that reliable and valid measurement methods have been developed, that the resulting measures complement economic and social national welfare indicators, and that health, sufficient material welfare, income equality, and non-material consumption are important determinants of PWB. The challenge is to globally reduce private material consumption levels in affluent countries. It is suggested that one role SI may play is in investing or actively engaging in companies that efficiently meet an increasing consumer demand of non-material consumption. Future research should address this role of SI.

Relationship between Corporate Sustainability Management and Sustainable Tax Strategies

This study analyzed the relationship between the environmental, social, and governance (ESG) assessment results of the Korea Corporate Governance Service, which evaluates the sustainability management levels of Korean companies and the variability in the five-year cash effective tax rates, a proxy for sustainable tax strategies. Corporate sustainability management allows the continuation of businesses that consider environmental protection, social contribution, and ethical management, as well as short-term financial performance. We expect these companies to prioritize sustainable tax strategies that ensure the long-term maintenance of the tax strategy results. Using a sample of firms listed in the Korean securities market during the 2011–2017 period, we adopted a two-way clustered regression model by a firm and year and established a research model with reference to previous studies and tax strategies. We found a significant negative association between excellent ESG ratings and the variability of cash effective tax rates, as well as between the implementation of ESG assessments and the variability of cash effective tax rates. This result indicates that companies with excellent corporate sustainability management strengthen their sustainable tax strategies and that companies become more interested in sustainable tax strategies after implementing ESG assessments. This study sheds light on the relationship between corporate sustainability management and sustainable tax strategies, helping improve our understanding of the impact of corporate sustainability management on sustainable tax strategies.

Informal institution and corporate innovation: From the perspective of social trust

Purpose: This study examines how social trust, as an informal institution, creates a cooperative and honest atmosphere to improve managers’ willingness for firm innovation. This study also addresses that the informal system may substitute for the formal institutions in promoting corporate innovation. Design/methodology/approach: This study opts a sample of Chinese listed firms over the period of 2007–2014. We obtain the detailed patent application information from the official website of China Patent and Intellectual Property Office. The social trust information is based on the results of Chinese Enterprise Survey System. Findings: The results indicate that firms located in regions of high social trust tend to have more innovation output, and is robust to a battery of sensitivity tests. The authors further document that this effect is more pronounced for firms with poor short-term financial performance, which are located in regions with weak legal environments and firms having lower information transparency. In addition, the authors also demonstrate that social trust can help firms to get adequate funds to reduce financial pressure and encourage firms to pay more attention to long-term benefits, alleviating investors as well as management myopia. Research limitations/implications: Limited by the data sources, when measuring innovation activity, the authors only use patent numbers represent for innovation output. Then, this study measures the patent quality through classifying patent categories (invention patent or others), since in China, the citation data are imperfect and inadequate. Practical implications: The results suggest that social trust means a good culture of honesty and cooperation can promote firm’s innovation engagement. Especially, in emerging markets, where formal mechanisms are relatively less effective, informal institutions can serve as an alternative system for alleviating information asymmetry. Originality/value: This study contributes to the literature in two ways. First, this study finds the positive effect of social trust on corporate innovation, which provides a new perspective for deepening the understanding of the influence factors of innovation. Second, this study further clarifies the mechanism of social trust promoting firm innovation, indicating that social trust can effectively alleviate outsiders’ concern about moral hazard risk. Then the stakeholders are more willing to provide financial support and pay more attention to the firm’s long-term performance.