Financial Performance Variables Research Articles

THE DETERMINENTS OF COMMERTIAL BANKS FINANCIAL PERFORMANCE IN ETHIOPIA.

The study was attempted to investigate determinants of financial performance of commercial banks in Ethiopian by using secondary data. The data were obtained from audited financial statements of five sampled commercial banks for the period of 1997 to 2017 and National Bank of Ethiopia. The study used return on assets (ROA) and return on equity (ROE) as dependent financial performance variable. Moreover, the study used bank specific variables as explanatory variables. Both descriptive statistics and econometrics model specifically fixed effects estimation were used to analyze the relationships of dependent variable with explanatory variables. The major findings of the study shows that bank specific determinants were very important in explaining financial performance of commercial banks. The management efficiency, customer deposit to total asset ratio, capital adequacy ratio, loan to deposit ratio were positively and significantly related to bank’s financial performance. The study recommends that banks put a lot of focus on their own internal processes since bank specific factors have the biggest impact on their profitability. Most importantly, Ethiopian commercial banks should invest in expand in new geographical area and also upscale their innovation leading to products attractive to consumers. Competition, which is the main industry specific factor affecting profitability, should be handled through well designed marketing strategy.

Forecasting the Environmental, Social, and Governance Rating of Firms by Using Corporate Financial Performance Variables: A Rough Set Approach

The environmental, social, and governance (ESG) rating of firms is a useful tool for stakeholders and investment decision-makers. This paper develops a rough set model to relate ESG scores to popular corporate financial performance measures. This methodology permits handling with information in an uncertain, ambiguous, and imperfect context. A large database was gathered, including ESG scores, as well as industry sector and financial variables for publicly traded European companies during the period 2013–2018. We carried out 500 simulations of the rough set model for different values in the discretization parameter and different grouping scenarios of firms regarding ESG scores. The results suggest that the variables considered are useful in the prediction of ESG rank when firms are clustered in three or four equally balanced groups. However, the prediction power vanishes when a larger number of groups is computed. This would suggest that industry sector and financial variables serve to find big differences across firms regarding ESG, but the significance of the model drops when small differences in ESG performance are scrutinized.

The Effect of Financial Performance on Economic Growth With Allocation of Capital Expenditures as Intervening Variable

This study aimed to examine the effect of financial performance on economic growth with the allocation of capital expenditure as an intervening variable in District/City Governments in Jambi Province. The financial performance variables measured were the degree of fiscal decentralization, growth of PAD, effectiveness of PAD, financial efficiency and BUMD’s contribution. Data analyzed using path analysis with AMOS program were based on secondary data in the form of panel data sourced from district/city APBD datas in Jambi Province. The results showed that only the degree of fiscal decentralization, the effectiveness of PAD and financial efficiency had direct effect on the allocation of capital expenditure. In addition, only growth of PAD, effectiveness of PAD, financial efficiency and allocation of capital expenditures had direct effect on economic growth. The capital expenditure allocation variable only partially mediated the effect of the fiscal decentralization, PAD effectiveness and financial efficiency on economic growth.
 Keywords: Financial Performance, Capital Expenditure, Economic Growth.

Determinants of the Quantity of Environmental Disclosure in Australian Companies

The objective of this study is to examine the effects of company characteristics, company financial performance, and type of audit firm on environmental disclosure. The population in the study was companies listed on the Australian Securities Exchange (ASX) in year of 2017. Using purposive sampling technique, this study only select 100 companies with the highest market capitalization in Australia. Samples that met the criteria amount to 99 units of analysis. The data collection used documentation techniques. The research data analysis used descriptive statistics and inferential statistics. The results of the regression analysis show that company size and industry type have a significant positive effect on environmental disclosure. While company age, leverage, profitability, and audit firm type do not affect on environmental disclosure. Based on the results of the study, it can be concluded that the companies included in the category of sensitive industries reveal more environmental information than companies in the category of non-sensitive industries. Suggestions for further research are to use other proxies to measure company financial performance, and add or use other independent variables such as environmental performance and good corporate governance that may significantly influence environmental disclosure.
 Keywords: Company Age, Company Size, Leverage, Profitability, Audit Firm Type, Industry Type, Quantity of Environmental Disclosure.

THE SHARIA SUPERVISORY BOARD AND CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE: A SHARIA PERSPECTIVE IN INDONESIA

Purpose of the study: This research aims to examine the relationship between the Sharia Supervisory Board (SSB) and the Corporate Social Responsibility (CSR) disclosure with financial performance as a mediating variable in Indonesia. By understanding the importance of the SSB responsibilities in the continuity of Sharia Banks, therefore, it is necessary to re-examine them.
 Methodology: This research was conducted on sharia banks registered in Sharia Banking Statistics of the Financial Services Authority (Otoritas Jasa Keuangan (OJK) in Bahasa) during the period of 2010-2016. There were 6 Sharia Banks involved as the sample of this study selected through a purposive sampling technique.
 Main Findings: The results showed that the Sharia Supervisory Board had a positive relationship with the CSR disclosure. But, this study implies that the CSR disclosure is not able to mediate the relationship between the SSB with the CSR disclosure of sharia banks in Indonesia.
 Applications of this study: In Indonesia, the purpose of existence of the SSB in Sharia Banks is to tend to comply with regulation, and this condition may affect the results. So, some measurement about the SSB in Indonesia is needed in future studies. Also, for future studies, it is suggested that they may add quality assets as a proxy for financial performance and other variables in order to obtain better results.
 Novelty/Originality of this study: This study tries to prove empirically the relationship between the SSB on the CSR disclosure of Sharia Banks in Indonesia with financial performance as its mediating variable. This study is indispensable to do in Indonesia, as the country with the biggest Muslim population in the world.

The Effect of Managerial Ownership, Financial Performance, Corporate Competition on Stock Prices with Capital Structure as the Intervening Variable in the Coal Mining Companies Listed on the Indonesia Stock Exchange

This study aimed to find out the effect of managerial ownership, financial performance, corporate competition on stock prices with capital structure as the intervening variable in the coal mining companies listed on the Indonesia Stock Exchange. Managerial ownership variables by the shareholding presentation. Financial performance variables by Total Asset Turnover (TATO). Firm competition variable by Concentration Ratio (CR). Capital structure variables by Debt to Equity Ratio (DER). Stock prices variable by Price to Book Value (PBV). The population of this study was the coal mining companies listed on the IDX. This study used Purposive as the sampling technique. The data source was secondary data from financial statements published through the IDX official website. This study used descriptive statistics and inferential statistics with a quantitative approach using regression techniques with the E-Views version 10 program. The results of this study showed that the dealings of managerial ownership had a positive and significant effect on DER, TATO had a negative and not significant effect on DER, while CR had a negative and significant effect on DER. The dealings of managerial ownership, TATO, DER has a positive and significant effect on PBV, while CR has a negative and not significant. The dealings of managerial ownership influences PBV through DER, interestingly TATO has no effect on PBV through DER and CR influences PBV through DER

DAMPAK PENYALURAN KREDIT USAHA RAKYAT (KUR) TERHADAP KINERJA KEUANGAN PADA BANK PEMERINTAH (BUMN) DI INDONESIA

This study aims to analyze the financial performances (CAR, NPL, ROA, BOPO, LDR) of Indonesian state-owned-enterprise (BUMN) Banks which also acted as Kredit Usaha Rakyat (KUR). The research design used in this paper is descriptive qualitative using sample studies which included state-owned-enterprise banks that distributed the micro credit program going from 2005 up to 2017. The data analysis used is financial trend analysis and paired sample t-test for performance variables conducted using SPSS. The result showed a declining trend pattern of CAR, BOPO, NPL, and LDR variables while on the other hand, a rising trend pattern for ROA variable. The paired t test indicated no significant differences between CAR, ROA, and BOPO in before and after period of being the Kredit Usaha Rakyat (KUR) program. The NPL and LDR variables were concluded as financial performance variables that were affected by the micro credit program distribution activities.

ANALISIS UKURAN PERUSAHAAN, FREE CASH FLOW(FCF) DAN KEBIJAKAN HUTANG TERHADAP KINERJA KEUANGAN PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA

The purpose of this study was to analyze the Free Cash Flow (FCF) Firm Size and the Debt to Equity Ratio on Financial Performance of Manufacturing Companies on the Indonesia Stock Exchange. This research is causal. The data taken as this research are Manufacturing Companies listed on the Indonesia Stock Exchange in 2017-2018. The population in the study was 146 companies, with a sample of 30 companies using the purposive sampling method, so that the number of observations was 60 units of observation. The data analysis method in this research is multiple linear regression. R Square Testing Results of 0.162 means that the independent variable is X1Firm Size x2 Free Cash Flow (FCF), x3 Debt to Equty Ratio simultaneously affects Financial Performance by 16.2% and the remaining 83.8% is influenced by other factors. Research Results Partially understood that the Firm Size variable has no negative effect and is not significant on Financial Performance. According to the data in table 5. Results of the statistical equation test that the value of Sig. Firm Size variable x1 0.872> 0.05 does not affect and is not significant to the dependent variable Y Financial Performance then the hypothesis is rejected. The results of the study are partially understood that the Free Cash Flow (FCF) variable has a positive and significant effect on financial performance. According to the data in table 5. Results of the statistical equation test that the value of Sig. variable Free Cash Flow (FCF) x2 0.043 <0.05 significant effect on the dependent variable Y Financial Performance. Then the variable Free Cash Flow (FCF) hypothesis has a positive effect on the Financial Performance of Manufacturing Companies in the Indonesia Stock Exchange. The research results are partially known that the Debt to Equity Ratio variable has a positive and significant effect on Financial Performance. Sig value. Debt to Equity Ratio Variable x3 0.018 <0.05 has a significant effect on the dependent variable Y Financial Performance of manufacturing companies on the Indonesia Stock Exchange. Then the hypothesis of Debt to Equity Ratio Variables has a positive effect on the Financial Performance of Manufacturing Companies on the Indonesia Stock Exchange. It is simultaneously significant. Where the probability value (Sig.) 0.018 <0.05, the influence of the free variable consists of the variable Company Size x1, Free Cash Flow (FCF) variable x2, Debt to Equity Ratio Variable x3 Against the Bound Variable Financial Performance variable Y in Manufacturing Companies listed on Indonesia stock exchange.

Pengaruh Operating Leverage dan Struktur Modal terhadap Kinerja Keuangan pada Perusahaan Go Publik Sektor Property Dan Real Estate

The company's financial performance is a benchmark for the success of managers in running a company. This study aims to determine the effect of operating leverage and capital structure partially or simultaneously on financial performance in the Go Public Company Property and Real Estate Sector. The sampling technique in this study is to use purposive sampling. Data analysis method in this study uses multiple regression analysis which is used to determine the effect of independent variables on the dependent variable together (F test) and partially (t test) and R2 test (coefficient of determination) carried out to find out how much influence the operating variable leverage (DOL) and capital structure (DER) on financial performance variables (ROA). From the t test results it is known that the variable operating leverage (DOL) and capital structure variables (DER) with a significance value of 0.044 and 0.015

Financial performance–efficiency nexus in public health services: A nonparametric evidence-based approach

Public health services, as a preventive aspect of health care, are essential for the sustainability of the entire health care system. However, the context of public health services, which focus is primarily on prevention, is not a common setting when measuring the efficiency within nonparametric evidence-based approach. The aim of this study is to measure the efficiency of the financial performance of organizational units of the public health institute in Croatia, the Health Ecology Department in particular, during the period 2016–2018 using data envelopment analysis. Among the many reasons behind choosing this nonparametric method is the fact that it identifies the sources of inefficiency and specifies the directions and magnitudes of improvements required. Two input-oriented models – CCR under constant and BCC under variable returns-to-scale assumption – are employed for evaluating three types of efficiency – technical, pure technical and scale efficiency. Two hypotheses are examined and empirically confirmed: first, that there is significant between-unit variability in financial performance, and second, that investments are the major source of inefficiency among the observed indicators. The results have additionally revealed that the mentioned differences are less pronounced in the case of pure technical efficiency, implying that the overall inefficiency of the Health Ecology Department units can be generally attributed to scale efficiency. Besides, only three out of twelve department units are considered efficient. The implications of the research results are aimed at further research and testing the efficiency of the entire network of public health institutes, as well as to provide policy makers with new insights when considering different modes of organizing and delivering public health services.

Selected Macro-Economic Variables and Financial Leverages Impact on Performance Indicators of Quoted Chemical Firms in PSX

This research paper scrutinizes the correlation between one of financial leverage tool i.e. capital structures and financial performance variables of firms with the evidence from quoted companies from chemical sector in Pakistan Stock Exchange (PSX) during 2004-2015. To estimate the relationship between capital structure and performance variables we selected three profitability ratios i.e. net profit margin, return on assets and return on equity, whereas for capital structure an important leverage ratio, D:E is selected as independent variable. Credit to GDP ratio and lending interest rate are also included in model as independent control variables. The results concluded that interest rate has insignificant effect on performance of firms. However, leverage ratio and credit to GDP ratio has relatively significant relationship with all performance variables. The outcomes through this study are consistent with the findings of earlier researches. Forthcoming work can be done to probe different industries using other new financial performance variables.

Accountability through intellectual capital disclosure in Italian Universities

This paper aims to investigate intellectual capital disclosure (ICD) provided by Italian public universities in their annual reports and to identify and examine its drivers. An empirical analysis of annual reports of Italian public universities for the year 2014 is conducted through content analysis. The information retrieved from this forms the basis for regression analysis (OLS model) to relate the disclosure index to its drivers which include governance features, financial performance and control variables. The empirical analysis shows that human and internal (organisational) capital are the most disclosed categories of intellectual capital. The results also show that board independence and university size positively affect ICD in Italian public universities. The methodology adopted in this study could be replicated for other countries to obtain a better understanding of how ICD can help meet stakeholder information needs. The results provide a useful basis for further investigation into ICD drivers and influences and may also enable regulators and standard setters to better understand and regulate IC practices in universities.

Impacts of ownership structure on the financial performance of conventional and Islamic banks in the agency theory context

According to the literature review, the analysis results of the impact of ownership structure quality on financial performance within conventional and Islamic financial institutions are contradictory. In our study, we performed a fine differential analysis aimed at resolving this ambiguity. The financial performance and ownership structure variables of conventional and Islamic banks were collected from 16 countries located in three continents: Europe, Asia, and Africa. Two samples were collected that each of them is composed of 63 banks. By using the OLS method, these panel data were compared to the impact of ownership structure on the financial performance between both types of banks in the agency theory framework during the period 2010-2018, giving us 567 bank-year observations in each sub-sample. Results revealed that the ownership structure of conventional banks has had an explained ambiguous impact on its financial performance, whereas that of Islamic banks has a positive effect. Overall, the impacts of the Chief Executive Officer (CEO) shareholding and the board’s chairman shareholding are more significant on the financial performance of conventional banks than those of impacts related to Islamic banks.

Impact of Corporate Social Responsibility Disclosures on Financial Performance of Listed Manufacturing Companies in Sri Lanka

This study examines whether corporate social responsibility (CSR) towards primary stakeholders influences the financial performance (FP) of listed manufacturing companies (LMC) in Colombo stock exchange (CSE) in Sri Lanka. Data on dependent variable and independent variables was collected from annual reports of thirty listed manufacturing firms for the period of five years. Dependent variable of financial performance was measured by Return on Capital Employed (ROCE) which was calculated from relevant figures which are available in statement of financial position and income statement and accounting notes. Content analytical technique was used to developed content indexes on five stakeholders groups namely Community, Customers, Employees, Environment and Investors based on disclosures which are available in global reporting initiative-G3 guidelines. The regression analysis of the study has found that there is a statistically significant positive association between CSR indexes on stakeholders and FP. The study firmly concluded that higher social responsiveness of listed manufacturing firms in Sri Lanka yielded higher financial performance than the firms which are lower position in term of social responsiveness.

The Effect of Earnings Quality on Financial Performance in Indonesia : is the State-Owned Bank better than Private Bank?

The primary objective of this study is to analyze the effect of earnings quality on financial performance of banks in Indonesia by comparing the SOEs and private banks. This study uses discretionary accruals and earnings persistence indicators to measure earnings quality, as well as financial performance variables measured through return on assets, return on equity, rate return on loans and total asset turn over. Eight conventional banks compared in this study are 4 government banks and 4 private banks, with research data from 2006-2018. Data is processed using Partial Least Square Multigroup Moderation Technique. The results of this study indicate that earnings quality has a significant effect on financial performance of banks in Indonesia. While the results of bank type moderation show that the effect of earnings quality on financial performance of private banks is greater than that of state-owned banks. This study recommends the importance of applying earnings quality in banks, especially in state-owned banks. Furthermore, this study suggests that government companies should avoid earnings management in order to create good and high quality financial performance, especially in the banking sector in Indonesia.

Relationship between Corporate Social Performance, Corporate Financial Performance and Financial Risk in Indian Firms

This study examines the relationship between Corporate Social Performance and Corporate Financial Performance and Financial Risk of BSE top 10 companies in India. The variables of Corporate Social Performance and Financial Performance and Financial Risk were used in this study. There was positive relationship between Corporate Social Performance, Corporate Financial Performance and Financial Risk, at Bajaj Finance Ltd, Reliance Industries Ltd, Bajaj Auto Ltd, State Bank of India, Hindustan Unilever Ltd, Asian Paints Ltd and Bharathi Airtel Ltd. The novelty of the study is that the analysis of this study focuses on CSP, CFP and Financial Risk in respect of Indian firms.

The Effect of Regional Original Income and Regional Financial Performance on Economic Growth in North Sumatera Regency

The purpose of this study is to examine the effect of regional own-source revenue and financial performance of local governments on economic growth in the regencies / cities of North Sumatra. The population is 33 districts / cities (25 districts and 7 cities) in North Sumatra. Sample (25 districts and 7 cities). The data consists of GDP (Gross Regional Domestic Product) with constant prices to find out economic growth in the district / city of North Sumatra, realization of PAD (regional income) and data on local government financial performance. The data was obtained from the Central Statistics Agency of North Sumatra and analyzed using linear regression analysis and statistical tests t. The results showed that some of the PAD had a positive and significant effect on economic growth and government financial performance variables had a positive and significant effect on economic growth in the regencies / cities of North Sumatra.

Financial institutions mergers: a strategy choice of wealth maximisation and economic value

PurposeThis study Investigates Shareholders' value adjustment in response to financial institutions (FIs) merger announcements in the immediate event window and in the extended event window. This study also investigates accounting measures performance, comparison of post-merger to pre-merger, including several cash flow measures and not just profitability measures, as the empirical literature review suggests. Finally, the authors examine FIs mergers orientations of diversification and focus create more value for shareholders (in the immediate announcement window and several months afterward) and/or generates better cash flows, profitability and less credit risk.Design/methodology/approachThis study examines FIs merger effect on bidders’ shareholder’s value and on their observed performance. This examination deploys three techniques simultaneously: a) an event study analysis, to estimate and calculate abnormal returns (ARs) and cumulative abnormal returns (CARs) in the narrow windows of the merger announcement, b) buy and hold event study analysis, to estimate ARs in the wider window of the event, +50 to +230 days after the merger announcement and c) an observed performance analysis, of financial and capital efficiency measures before and after the merger announcement; return on equity, liquidity, cost to income ratio, capital to total assets ratio, net loans to total loans, credit risk, loans to deposits ratio, other expenses and total assets, economic value addition, weighted average cost of capital and return on invested capital. Deal criteria of value, mega-deals, strategic orientation (as in Ansoff (1980) growth strategies), acquiring bank size and payment method are set as individually as control variables.FindingsResults show that FIs mergers destroy share value for the bidding firms pursuing a market penetration strategy. Market development and product development strategies enable shareholders’ value creation in short and long horizons. Diversification strategies do not influence bidding shareholders’ value. Local bank to bank mergers create shareholders’ value and enhance liquidity and economic value in the short run. Bank to bank cross border mergers create value for bidders’ in the long term but are associated with high costs and higher risks.Originality/valueA significant advancement over the current literature is in assessing mergers, not only for bank bidders but also for the three pillars FIs of the financial sector; banks, real-estate companies and investment companies mergers. It is an improvement over current finance literature because it deploys two different strategies in the analysis. At a univariate level, shareholder value creation and market reaction to merger announcements are examined over short (−5 or +5 days) and long (+230 days) windows of the event. Followed by regressing, the resultant CARs and BHARs over financial performance variables at the multivariate level.

Analisa Kinerja Keuangan 34 Provinsi Indonesia di Tahun 2018

Power sharing and delegation is politics in nature. The economic side appears on the regional budget planning and realisation. It is the mechanics and the setting of general policy, priority, and plafond of temporary budget. The latent fiscal gap occurs when revenues collected are lesser than expenditures spent, vice versa. Higher portion of expenditures posted as basic allocation has not been coped well with steady regional income. Supports in terms of better capability and capacity to collect regional revenues appear to be non-existent and meaningless, but the resource-rich regions. Even so, the central government appears to have big and deep impacts on the definition of taxable objects and types, and local retributions. This study is to seek which financial performance indicators that can be well-predicted by a numerous variables and indicators forming the regional budgets (APBD) of 34 provinces in Indonesia in 2018. The data was collected from DJPK website in early May 2019. The research method is quantitative descriptive in nature, and using both the OLS regression and determinant regression analysis. Based on the research of recent studies, a numerous financial performance indicators were derived as dependent variables, along with the variables forming the regional budgets of 34 provinces in Indonesia as independent variables. Sixteen dependent variables were set, whilst the 48 independent variables comprised of 4 groups, that is 4 variables of regional specific (r_#), 23 variables of revenues (y_#), 9 variables of expenditures (c_#), and 12 variables of finance/fiscal (f_#). Upon the results of OLS linear regression, 3 variables of financial performance appeared to be the most significant and appealing than the rest. They were independence (k_08), the ratio of DAU in TKDD to the DAU Formula (k_16), dan decentralisation (k_10). On the contrary, 3 variables of financial performance appeared to have no determining variables. They were PAD growth (k_14), fiscal soundness and regional financial management (k_03), dan effectiveness (k_11). These 3 variables were a part of 4 variables having the least adjusted R2, with infrastructure (k_04) as the remaining one. The heteroscedastic nature that appears in the k_14 estimation equation has suggested that k_14 fails to be used as the benchmark and reference of financial performance of regional budgeting, at least in its definition and operationalisation in this study and research. Likewise the usage of f_07 variable, the fiscal gap 1, the difference of DAU Formula with basic allocation (in basic data source).

Does Social Responsibility Influence Organizational Performance?

El presente trabajo de investigación tiene como objetivo analizar el impacto que tiene la Responsabilidad Social Empresarial (RSE) en el desempeño de las empresas, específicamente en la calidad e imagen de productos y servicios, la satisfacción de clientes, la cuota de mercado, la productividad, la rentabilidad y eficiencia, y la satisfacción del personal. Se utilizó una muestra de 671 empresas del estado de Guanajuato, México para analizar los efectos específicos que tiene cada uno de los componentes de la RSE en las variables de desempeño financiero y no financiero. Los resultados muestran que las acciones encaminadas a respetar y cuidar el medio ambiente, y el comportamiento ético con los clientes son variables fundamentales que influyen positivamente en el desempeño general de la empresa. Se describen las implicaciones al sector empresarial y las futuras investigaciones.