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Article
Publication date: 29 May 2007

Tariq H. Ismail

This study aims to examine performance evaluation measures across private sector companies in an Egyptian context and pinpoints obstacles that may limit the adoption of the…

4065

Abstract

Purpose

This study aims to examine performance evaluation measures across private sector companies in an Egyptian context and pinpoints obstacles that may limit the adoption of the balanced scorecard (BSC).

Design/methodology/approach

Uses a questionnaire that was mailed to a sample of 150 companies listed in the Egyptian stock exchange market. The analysis is directed at determining managers' perceptions of performance evaluation measures within the Egyptian private sector. Descriptive statistics, frequency of use of companies' practices and possible relationships between variables provide the basis for discussion.

Findings

Companies rely on both financial and non‐financial measures of performance evaluation. The profit margin, as a financial measure, is also the most commonly used performance measure. Customer satisfaction is the most commonly used non‐financial measure of performance evaluation. The BSC has wide spread use in the Egyptian companies surveyed, but the level of use of multi‐dimensional indicators is significantly low. The survey provides considerable insight into obstacles inhibiting the adoption of the BSC. The most significant obstacle is the inadequacy of implemented information systems.

Research limitations/implication

Survey results restrict generalization, as the sampling design cannot be claimed to represent all Egyptian companies. Also a relatively low response rates must be taken into account.

Originality/value

Provides an insight into performance evaluation practices in the private sector in a developing country.

Article
Publication date: 1 September 1997

Colin W. Fuller

Two case studies in health and safety management identified key performance indicators that reflected a company’s overall performance obtained from a full benchmarking audit. An…

12471

Abstract

Two case studies in health and safety management identified key performance indicators that reflected a company’s overall performance obtained from a full benchmarking audit. An intra‐company benchmarking audit, comparing operational health and safety management performance was completed within 12 semi‐autonomous subsidiaries of a large national food manufacturer. A significant (r = 0.985) positive relationship was obtained between ten operational performance indicators and overall performance. The key factors were found to have a common theme relating to employer‐employee openness in communication on health and safety issues. An inter‐company benchmarking audit comparing strategic health and safety management performance was completed within eight companies in the small, multi‐site retail sector. A significant (r = 0.988) positive relationship was obtained between ten strategic performance indicators and overall performance. The key factors did not have a common theme but there was evidence that integration of health and safety management into long‐term business decision making was a strong factor.

Details

Benchmarking for Quality Management & Technology, vol. 4 no. 3
Type: Research Article
ISSN: 1351-3036

Keywords

Article
Publication date: 1 January 2006

Christopher Pass

The Article seeks to identify the configuration of executive directors conditional option and LTIP arrangements used to align the interest of the company’s directors and…

1031

Abstract

Purpose

The Article seeks to identify the configuration of executive directors conditional option and LTIP arrangements used to align the interest of the company’s directors and shareholders.

Design/methodology/approach

The article presents an empirical study of the option and LTIP arrangements (current and previous) of 51 major UK companies. The article focuses on the configuration of option schemes and LTIPs in respect of three critical elements: the performance target selected, the comparator used to benchmark performance and the quantitative performance target level requirement to be achieved to trigger rewards. The period 1989‐2002, covered by the research indicates a substantial degree of “experimentation” with many companies amending their original option schemes and LTIPs and a larger number of other companies introducing new arrangements. A substantial number of schemes can be characterised as being “undemanding” rewarding average rather than excellent performance.

Research limitations/implications

It is It is proposed (in a follow up paper) to econometrically test for associations between particular configurations (identified in this article) and actual corporate financial performance, i.e. which configurations have the most robust impact on performance.

Practical implications

The author makes a number of recommendations aimed at making option schemes and LTIP, more “stretching”, rewarding only excellent rather than average performance.

Originality/value

This is the first paper to explicitly look at the components of option schemes and LTIPs in a detailed way, questioning the merits/demerits of the targets and comparators commonly used to evaluate performance.

Details

Handbook of Business Strategy, vol. 7 no. 1
Type: Research Article
ISSN: 1077-5730

Keywords

Article
Publication date: 1 December 2003

Christopher Pass

UK plcs use option schemes and increasingly long‐term incentive plans (LTIP’s) to reward their executive directors in order to improve corporate performance and align their…

5613

Abstract

UK plcs use option schemes and increasingly long‐term incentive plans (LTIP’s) to reward their executive directors in order to improve corporate performance and align their interests more closely with those of the shareholders of the company. This paper presents a study of the option and LTIP arrangements used by a sample of 51 large UK companies over the period 1994‐2001. The general finding is that a substantial proportion of the schemes are “undemanding” rewarding average rather than exceptional performance.

Details

Corporate Governance: The international journal of business in society, vol. 3 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 29 February 2024

Gerasimos Rompotis

I seek to identify whether cash flow management can affect the performance and risk of the Greek listed companies.

Abstract

Purpose

I seek to identify whether cash flow management can affect the performance and risk of the Greek listed companies.

Design/methodology/approach

This study examines the relationship of cash flow management with performance and risk, using a sample of 80 non-financial companies listed in the Athens Exchange. The study covers the period 2018–2022, and panel data analysis is applied. Both financial performance and stock return are taken into consideration, while risk concerns the volatility of the companies’ share prices. The various explanatory variables used include the net cash flow, free cash flow, cash conversion cycle days, cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, inventory days, customer days and supplier days.

Findings

The empirical results provide evidence of a positive relationship between financial performance and net cash flow and free cash flow. In addition, operating cash flow is positively related to financial performance. The opposite is the case for investing and financing cash flow. Finally, some evidence of a negative relationship between financial performance and inventory and customer days is provided too. On the other hand, stock return and risk are not related to the cash flow management variables at all.

Originality/value

To the best of my knowledge, this is one of the few studies to examine the relationship of cash flow management with performance and risk, using data from the Greek stock market. The results can form an effective selection tool for investors seeking Greek companies with the highest financial performance potential, which may reward them with higher dividends.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 8 February 2024

Maria Elisabete Neves, Rui Guedes, Catarina Proença and Belen Lozano

The purpose of this paper is to analyse the impact of political connections and gender diversity on the performance of Iberian companies as a singular market and considering…

Abstract

Purpose

The purpose of this paper is to analyse the impact of political connections and gender diversity on the performance of Iberian companies as a singular market and considering Portugal and Spain separately.

Design/methodology/approach

The authors used panel data methodology, specifically GMM system estimation model by Arellano and Bond (1991) for the period from 2015 to 2020.

Findings

Results show that the performance of listed Iberian companies is influenced by political connections, by gender diversity and that gender diversity has a mitigating effect on the effects of political connections in each country. The mitigating effect of women is evident in both Portugal and Spain, as they are more cautious and principled, which is valued by short-term investors interested in an immediate investment. However, considering the Iberian Peninsula as a whole, the results indicate that – in the long term – women's political relationships can benefit performance through a better reputation and image, which can lead to better social and economic results in the long term.

Originality/value

To the best of the authors’ knowledge, this paper is original and covers an important gap in the literature when considering political connections and women's impact on these connections as determinants of the performance of Iberian companies.

Details

Gender in Management: An International Journal , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-2413

Keywords

Book part
Publication date: 4 August 2008

Belverd E. Needles, Marian Powers and Mark L. Frigo

This study examines the links between financial performance and executive compensation for high-performance companies (HPC). HPC display sustained and superior cash flow returns…

Abstract

This study examines the links between financial performance and executive compensation for high-performance companies (HPC). HPC display sustained and superior cash flow returns, asset growth, and total shareholder returns. In previous empirical analysis, HPC companies displayed specific identifiable financial performance drivers and measures when compared to companies in the S&P 500 (Needles et al., 2004). Most recently, HPC sustained their high performance when compared to the S&P 500 over varied economic periods. Further, the research identified operating asset management characteristics of these companies, especially as they relate to the cash cycle (Needles et al., 2004). Continuing this stream of research, this study first identifies the financial and non-financial performance measures related to compensation of top management of HPC as reported in the companies’ public disclosures. Then, these findings for HPC are matched to a set of comparable non-HPC. Finally, we evaluate the stated performance measures for executive compensation in light of the performance drivers and measures identified by previous research to be distinguishing characteristics of HPC. We hypothesize that HPC will more closely align stated performance measures for executive compensation with performance characteristics that have been shown to be characteristics of HPC. We find that HPC are more focused and unambiguous in their use of both financial and non-financial performance measures in executive compensation.

Details

Performance Measurement and Management Control: Measuring and Rewarding Performance
Type: Book
ISBN: 978-1-84950-571-0

Book part
Publication date: 8 April 2010

Belverd E. Needles, Anton Shigaev, Marian Powers and Mark L. Frigo

Purpose – This study investigates the links between strategy, execution, and financial performance with particular attention to the underlying performance drivers that describe…

Abstract

Purpose – This study investigates the links between strategy, execution, and financial performance with particular attention to the underlying performance drivers that describe how a company executes strategy to create financial value.

Methodology – This study empirically investigates companies in the United States and 22 other countries over a 20-year period (11 successive 10n-year periods: 1988–2007): (1) to compare financial performance characteristics of HPC versus non-HPC; (2) to study the sustainability of performance in HPC; and (3) to identify the companies that exit or enter the HPC classification and the performance drivers and performance measures that characterized the change in HPC classification.

Findings – The 20-year longitudinal results confirm the results of prior studies as to the long-term superior performance of HPC over other companies (Objective 1). For sustaining HPC, results were consistent as to total asset management, profitability, financial risk, and liquidity (Objective 2). Declining HPC companies fail at total asset management, profitability, and operating asset management and significantly increase their financial risk. Emerging HPC companies improve liquidity through improved operating asset management and cash flows (Objective 3).

Practical implications – To become a HPC management must generate increased cash flows from income, manage receivables and inventory vigorously, and reduce its debt in relation to equity. Thereafter, management must concentrate on maintaining its asset turnover and growth in revenues while maintaining its profit margin and not increasing its debt to equity.

Value of the paper – The results provide direction for management of companies that aspire to HPC status and to maintain HPC status.

Details

Performance Measurement and Management Control: Innovative Concepts and Practices
Type: Book
ISBN: 978-1-84950-725-7

Book part
Publication date: 9 May 2014

Belverd E. Needles, Marian Powers, Mark L. Frigo and Anton Shigaev

The present study investigates whether companies that exhibit high performance characteristics in the pre-financial crisis period can maintain their high performance in the…

Abstract

Purpose

The present study investigates whether companies that exhibit high performance characteristics in the pre-financial crisis period can maintain their high performance in the financial crisis period of 2007–2009 and, in particular, the post-financial crisis period of 2010–2011.

Methodology

The current study of 1,473 companies in 25 countries and 66 industries (MSCI index) (1) extends the empirical research of prior studies through the year 2011; (2) identifies the operating characteristics (performance drivers and performance measures) and associated risk factors which were most critical with regard to sustaining, exiting, and entering HPC companies during the five 10-year periods since 1998–2007, and (3) summarizes conclusions about HPC results from the 13 ten-year periods (1989–1998 to 2002–2011) in this stream of research.

Findings

(1) Companies that sustain high performance over periods of financial stress clearly excel in asset turnover performance driver and on the performance measures of growth in revenues, profit margin, return on equity and return on assets. Sustaining HPC had less debt than other companies and consistent cash flow yields. Operating turnover ratios became less important in recent years as an indicator of high performance. (2) Although exiting companies maintained profitability, financial risk and liquidity, the key factor in their dropping out of HPC status is their failure to grow revenues. (3) Entering companies did not exhibit the superior performance in all categories.

Practical implications and value

The results provide strategic direction for management of companies that aspire to HPC status and to maintain HPC status once gained, particularly in times of global financial stress.

Details

Performance Measurement and Management Control: Behavioral Implications and Human Actions
Type: Book
ISBN: 978-1-78350-378-0

Keywords

Article
Publication date: 28 November 2023

Hanen Khaireddine, Isabelle Lacombe and Anis Jarboui

Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and…

Abstract

Purpose

Although the association between sustainability assurance (SA) quality and firm value has been examined in previous studies, the moderating relationship is novel in this study and highlights the effect of corporate environmental sustainability performance (CESP) on the relationship between SA quality and firm value. This study aims to examine whether such an effect is strengthened or weakened by eco-efficiency, as measured by ISO 14001 certification, aggregate CESP score and each individual dimension of CESP (emission reduction [ER], resource reduction [RR] and product innovation [PI]).

Design/methodology/approach

The sample includes 40 companies in Euronext Paris with the largest market capitalisations (the Cotation Assistée en Continu 40 [CAC 40] index) from 2010 to 2020. The authors apply the feasible generalised least squares regression technique to estimate all the regression models. Because observed associations may be biased by reverse causation or self-selection, the authors use the instrumental variable approach and Heckman two-stage estimation.

Findings

The results show that SA quality had a positive and significant effect on firm value. Second, the authors demonstrate that CESP, as assessed by ISO 14001 certification, has a stronger interaction with assurance quality and acting as a moderator variable. Using the ASSET4 scores, an alternative proxy for CESP, the authors find inconsistent evidence regarding the impact of CESP attributes. The CESP and ER scores are homogeneous and have a positive effect on firm value. However, the PI and RR CESP attributes are not homogenous and do not have the same interactive effect on firm value. The results are robust to the use of an instrumental variable approach and the Heckman two-stage estimation procedure.

Research limitations/implications

Policy implications: Regulators may be interested in the findings when considering current and future assurance requirements for sustainability reporting, and shareholders when considering SA as an investment choice criterion. The insights into and enhanced understanding of the incentives for obtaining high SA quality can help policymakers develop effective policies and initiatives for SA. Considering the possible improvements in sustainability performance when obtaining a high level of sustainability verification, governments need to consider mandating SA.

Practical implications

Firms receive clear confirmation of the importance of investing in SA quality. Financial markets do not evaluate SA dichotomously but reward companies with higher SA quality because of the greater credibility it provides. Firms should allocate a significant percentage of their annual budgets and other relevant resources to environmental training and development programmes to improve and maintain environmental performance. If they care about environmental issues, they must announce this by issuing sustainability reports and seeking assurance of the information disclosed. High-quality assurance not only has a significant effect on investors’ investment reliability judgements but also the perceived credibility of environmental performance fully moderates the effect of assurance on these judgements.

Social implications

This study has social implications; the authors find that the French market rewards firms that provide a high-quality assurance to guarantee the integrity of their sustainability reports. Therefore, by incorporating environmental sustainability into their financial goals, a better assurance ultimately will urge firms to move from green washing to strategic goals, which is beneficial for society. Further, firms that focus on sustainability as part of their business strategy may attract employees who engage in green behaviours at work and create a friendlier and productive environment because it gives meaning to the work they do and keeps them engaged to the level needed to perform their jobs capably.

Originality/value

This study contributes to the literature by re-examining the relationship between SA quality and firm value. It also provides new evidence on the moderating effect of CESP on the SA quality–firm value nexus. Specifically, it explores the joint effect of credibility and eco-efficiency on market confidence in sustainability information.

Details

Sustainability Accounting, Management and Policy Journal, vol. 15 no. 2
Type: Research Article
ISSN: 2040-8021

Keywords

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