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1 – 10 of 429Rejaul Karim, Md. Abdullah Al Mamun and Abu Sadeque Md. Kamruzzaman
The purpose of the present study is to determine how the cash conversion cycle (CCC) affects the financial performance of manufacturing companies in Bangladesh.
Abstract
Purpose
The purpose of the present study is to determine how the cash conversion cycle (CCC) affects the financial performance of manufacturing companies in Bangladesh.
Design/methodology/approach
The authors have collected data of 61 Dhaka Stock Exchange (DSE)-listed firms from the 10 distinct manufacturing industries of Bangladesh for 18 years, from 2003 to 2020. The data have been analyzed through the two-steps system generalized method of moment (GMM) regression model, using profitability indicators return on asset (ROA) and earnings per share (EPS) as dependent variables, while CCC has been used as the independent variable, whereas asset turnover (ATO) and financial leverage (LEV) were used as control variables to assess the relationship between the CCC and financial performance.
Findings
The findings indicated that CCC has a negative connection with profitability – ROA and EPS, with the connection between CCC and EPS being highly significant. This indicates that reducing the inventory conversion time, reducing the period of receivable collection and making payments to creditors with potential delays might help Bangladeshi manufacturing firms boost their profitability. In addition, the firm-specific characteristics, namely ATO and LEV significantly affect the firm's profitability.
Research limitations/implications
The research was based only on secondary sources and information was scarce. This research was conducted to determine the impact of the CCC on the corporate profitability of the manufacturing sector solely. There might be many other working capital variables that are still unexplored through this study.
Practical implications
The current study's findings are consistent with the traditional rule that minimizing the firm's days of the cash cycle may optimize financial performance. The results of this research have added to the existing body of knowledge on the topic of working capital management (WCM). Future research endeavors can be initiated for assessing the impact of the CCC on the firm's profitability in other industrial sectors or to identify other working capital variables that have much impact on corporate profitability.
Originality/value
This study is an original work of the researchers and adds value to the current literature in the domain of WCM and corporate profitability. The present study is the first one that covers firms in all the manufacturing industries in Bangladesh. The corporate managers, creditors, investors and other concerned stakeholders will be benefited from the findings of the present study.
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Umar Habibu Umar and Mamdouh Abdulaziz Saleh Al-Faryan
This study investigated how working capital management (WCM) influences the profitability of listed halal food and beverage companies.
Abstract
Purpose
This study investigated how working capital management (WCM) influences the profitability of listed halal food and beverage companies.
Design/methodology/approach
The study utilized a sample of 56 listed halal food and beverage companies operating in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE). Unbalanced panel data were generated from the Bloomberg database between 2008 and 2021. Besides, the study employed the two-step system generalized method of moments (GMM) technique for the estimation, which can address the models' endogeneity, heteroskedasticity and autocorrelation problems. Also, feasible generalized least square (FGLS) regression was applied to check the robustness of the results.
Findings
The study revealed that the cash conversion cycle (CCC) and accounts receivable period (ARP) significantly reduced firm profitability. Also, the inventory conversion period (ICP) significantly reduced return on assets (ROA) but insignificantly influenced return on equity (ROE). However, the results showed that the accounts payable period (APP) significantly increased firm profitability. These findings are robust to the results obtained by applying FGLS regression.
Research limitations/implications
The study utilized a sample of only the listed halal food and beverage firms that operate in Indonesia, Malaysia, Saudi Arabia, Pakistan and the United Arab Emirates (UAE).
Practical implications
The study suggests that the management of listed halal firms should adopt an aggressive policy in managing their working capital in order to enhance their financial performance. This could be attained by lowering CCC when ARP and ICP are reduced and APP is increased.
Originality/value
This study contributes to the literature by providing cross-country empirical evidence showing how working capital and its components affect the financial performance of firms that solely produce or buy and sell halal food and beverage products in five countries.
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Wei Wu, Chau Le, Yulu Shi and Fadi Alkaraan
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines…
Abstract
Purpose
Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.
Design/methodology/approach
The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.
Findings
Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.
Research limitations/implications
Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.
Practical implications
This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.
Originality/value
The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.
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Hania Waleed Tawfik El-Feel, Diana Mostafa Mohamed, Hala Magdy Amin and Khaled Hussainey
This paper aims to provide insights into the complicated relationship between earnings management (EM) and corporate social responsibility (CSR) during the financial downturn…
Abstract
Purpose
This paper aims to provide insights into the complicated relationship between earnings management (EM) and corporate social responsibility (CSR) during the financial downturn caused by the COVID-19 pandemic.
Design/methodology/approach
Parametric t-tests and non-parametric Wilcoxon rank-sum tests accompanied by ordinary least squares regression analysis, augmented with Newey–West procedure approaches, are used for a sample that consists of 1,984 firms from 47 countries for the period of 2014–2020. EM was proxied once with discretionary accruals using the modified Jones model (1995) and once with real earnings management (REM) using the Roychowdhury model (2006). This study uses environmental, social, and governance scores from the Thomson Reuters database as a proxy for CSR.
Findings
The results reveal that firms tend to engage more in EM practices during the pandemic and that more socially responsible firms tend to be honest and transparent during the financial reporting process. Interestingly, it was found that more socially responsible firms engaged less in REM practices during the pandemic.
Research limitations/implications
The findings of this research help lenders, investors, policymakers and managers gain a better understanding of EM practices during a negative shock and shed light on the importance of CSR in being ethical.
Originality/value
The findings extend both the literature on the role of CSR in promoting financial reporting quality and the literature on the impact of COVID-19 on accrual and REM practices.
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This study aims to examine the effect of ownership structure on financial performance of commercial banks in Kenya.
Abstract
Purpose
This study aims to examine the effect of ownership structure on financial performance of commercial banks in Kenya.
Design/methodology/approach
The data were collected from audited financial statements of 39 commercial banks in Kenya for the period 2009–2020.
Findings
Regression results found evidence of ownership structure explaining commercial banks’ financial performance. The results found a negative association between state ownership and net interest margin, a negative association between management ownership and net interest margin and a negative association between institutional ownership and return on assets.
Practical implications
Based on the findings, commercial bank management should therefore devise ownership structure policies that are geared toward boosting their financial performance both in the short run and the long run. Second, this study recommends a minority shareholding of the state in commercial banks to deter political interference, protect investors’ wealth from erosion and allow the majority shareholders to adopt a strong corporate governance mechanism for higher financial performance. Banks with a high percentage of state ownership should consider partial privatization to improve corporate governance practices. Third, banks should adopt a managerial ownership policy limiting the proportion of equity stock held by executives to limit their powers in strategic decision-making. Fourth, this study proposes a percentage limit on the equity stock of an institutional investor to eliminate bureaucracy in strategic decision-making and protect investors’ wealth.
Originality/value
The study finding is meant to inform regulation and operation policies in the banking sector and contribute to the literature on ownership structure, especially in the banking sector.
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Barnali Chaklader and Hardeep Singh Mundi
The paper examines contingent liabilities' effect on the firm's dividend decisions.
Abstract
Purpose
The paper examines contingent liabilities' effect on the firm's dividend decisions.
Design/methodology/approach
Fixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings.
Findings
The results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores.
Research limitations/implications
There needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions.
Practical implications
The authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation.
Originality/value
By investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.
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Rafal Kusa, Marcin Suder, Joanna Duda, Wojciech Czakon and David Juárez-Varón
This study investigates the impact of entrepreneurial orientation (EO) and knowledge management (KM) on firm performance (PERF), as well as the mediating role of KM in the EO–PERF…
Abstract
Purpose
This study investigates the impact of entrepreneurial orientation (EO) and knowledge management (KM) on firm performance (PERF), as well as the mediating role of KM in the EO–PERF (EO-PERF relationship). In particular, this study aims to explain the impact of KM on the relationship between the EO dimensions and PERF; dimensions are risk-taking (RT), innovativeness (IN) and proactiveness (PR).
Design/methodology/approach
This study uses structural equation modelling and fuzzy-set qualitative comparative analysis (fsQCA) methodologies to explore target relationships. The sample consists of 150 small furniture manufacturers operating in Poland (out of 1,480 in the population).
Findings
The study findings show that KM partially mediates the IN–PERF relationship. Furthermore, fsQCA reveals that KM accompanied by IN is a core condition that leads to PERF. Moreover, the absence of KM (accompanied by the absence of RT and IN) leads to the absence of PERF. In addition, the results show that all the variables examined (RT, IN, PR and KM) positively impact PERF.
Originality/value
This study explores the role of KM in the context of EO and its impact on PERF in the low-tech industry. The study uses simultaneously two methodologies that represent different approaches in the search for the expected relationships. The findings reveal that KM mediates the EO-PERF relationship.
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The study aims at examining the relationship between the forms of misclassification practices, namely expense shifting and revenue shifting. In particular, the study aims at…
Abstract
Purpose
The study aims at examining the relationship between the forms of misclassification practices, namely expense shifting and revenue shifting. In particular, the study aims at identifying the form of shifting that has been preferred by firms to meet the industry average profitability.
Design/methodology/approach
Core earnings and operating revenue expectation models are used to measure expense shifting and revenue shifting, respectively. The panel fixed-effects models are used to control for unobserved heterogeneity across industries and time.
Findings
Based on a sample of Bombay Stock Exchange-listed firms, the author finds that firms prefer expense shifting over revenue shifting to meet industry average profitability, implying that firms choose the shifting tool based on the relative advantage. Further, the findings deduced from the empirical results demonstrate that firm life cycle and mandatory adoption of International Financial Reporting Standards (IFRS) moderates the relationship between shifting forms and industry average profitability. However, the negative impact of IFRS on shifting practices is found to be less pronounced among BigN audit firms.
Originality/value
The study is among the pioneering attempt to document the substitution relationship between shifting forms. It is the first study that examines a form of classification shifting, where gross profit and core earnings both change as an effect of misclassification.
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Werner Kunz, Jochen Wirtz, Nicole Hartley and James Tarbit
Artificial intelligence (AI) is revolutionizing businesses and daily life, with AI-powered technologies like personal assistants and medical diagnostic systems transforming how we…
Abstract
Artificial intelligence (AI) is revolutionizing businesses and daily life, with AI-powered technologies like personal assistants and medical diagnostic systems transforming how we interact and make decisions. However, the ethical implications of these technologies cannot be ignored. AI systems can produce biased results and decisions if not designed to be fair and unbiased. Corporate digital responsibility (CDR) provides a valuable framework for addressing these ethical dilemmas. Service organizations need to navigate CDR issues across the data and technology life-cycle stages (e.g., their creation, operation, refinement, and retention) and across its digital service ecosystem (including its external business partners). Despite the risks associated with poor CDR practices, companies may adopt them to benefit from data monetization, enhanced customer experience, and productivity improvement. To mitigate these risks and build a strong CDR culture, organizations need to establish ethical norms, prioritize customer privacy, and ensure equitable power dynamics with business partners. The emergence of generative AI poses enhanced CDR challenges, such as AI complexity, monitoring, accountability, and workforce changes. Going forward, CDR is a crucial framework for firms to address the needs of their multiple stakeholders and to ensure sustainable business practices in the increasingly digital service world.
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Myriam Ertz, Shashi Kashav, Tian Zeng and Shouheng Sun
Traditionally, life cycle assessment (LCA) has focused on environmental aspects, but integrating social aspects in LCA has gained traction among scholars and practitioners. This…
Abstract
Purpose
Traditionally, life cycle assessment (LCA) has focused on environmental aspects, but integrating social aspects in LCA has gained traction among scholars and practitioners. This study aims to review key social life cycle assessment (SLCA) themes, namely, drivers and barriers of SLCA implementation, methodology and measurement metrics, classification of initiatives to improve SLCA and customer perspectives in SLCA.
Design/methodology/approach
A total of 148 scientific papers extracted from the Web of Science database were used and analyzed using bibliometric and content analysis.
Findings
The findings suggest that the existing research ignores several aspects of SCLA, which impedes positive growth in topical scholarship, and the study proposes a classification of SLCA research paths to enrich future research. This study contributes positively to SLCA by further developing this area, and as such, this research is a primer to gain deeper knowledge about the state-of-the-art in SLCA as well as to foresee its future scope and challenges.
Originality/value
The study provides an up-to-date review of extant research pertaining to SLCA.
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