Indices, firm identity and performance: implications from the European financial services

Abstract

Purpose

The purpose of this paper is to examine and analyze the significant qualitative factors that affect the financial performance of financial firms. The authors argue that those factors can be used as “indices of identity” or external cues that help financial firms enhance their relative position in the marketplace. This can be done by focusing on the indices that are highly and positively associated with financial performance measures. This is a practical approach since the financial products are characterized by intrinsic intangibility.

Design/methodology/approach

The researchers empirically test this framework in a sample of the European banking industry. The methodology utilizes the benefits of the “content analysis,” that focuses on the critical observed elements of firm identity as published in the most recognized publications. The indices of identity examined in this paper are reputation for clients, age, CEO, size, country of origin, geographic spread, and profits. Measures of financial performance include: return on assets, non‐performing loans/total loans, shareholder equity/total assets and deposits/total assets.

Findings

The results show that indices of identity are positively related to corporate financial performance and thus can effectively help firms be well recognized by other actors in the marketplace.

Originality/value

The paper contributes to the literature in two ways. First, the paper shows how firm's indices of identity can be quantified through the use of content analysis. Second, the paper creates an association between the indices of identity and financial performance. This association offers a quantitative approach that shows the possibilities of overcoming the problems of intangibility in the marketplace.

Citation

Eldomiaty, T., Behery, M., Ju Choi, C. and Ramzy, O.A. (2011), "Indices, firm identity and performance: implications from the European financial services", European Business Review, Vol. 23 No. 5, pp. 524-544. https://doi.org/10.1108/09555341111158146