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1 – 10 of over 15000Dorina Nicoleta Popa, Victoria Bogdan, Claudia Diana Sabau Popa, Marioara Belenesi and Alina Badulescu
The purpose of this work is twofold. First, looks to identify the main homogenous groups of companies after environmental, social, economic and governance (ESEG) disclosures, non-…
Abstract
Purpose
The purpose of this work is twofold. First, looks to identify the main homogenous groups of companies after environmental, social, economic and governance (ESEG) disclosures, non-financial statement and earnings per share (EPS), and second investigates the connection between variables.
Design/methodology/approach
Using financial and non-financial information from annual reports of private listed companies, the authors performed two-step cluster analysis (TSCA) in the first stage of the research, followed by parametric, nonparametric correlation analysis, as well as regression analysis based on panel data, in the second stage.
Findings
Results of TSCA revealed a cluster of companies with good financial and non-financial outcomes and a cluster of companies with poor performance. The performance dynamics showed a slight improvement during the period for few companies and composition analysis of clusters by industries through Kruskal–Wallis test highlighted differences between clusters, only for 2017. The main findings confirm a direct, although weak in intensity but statistically significant correlation between ESEG disclosure index, its sustainability component and financial performance (FP), valid for the entire period. Also, the results showed a direct link of low intensity to average, but statistically significant between the non-financial statement and EPS, valid only for 2017 and 2018.
Research limitations/implications
The results indicate mixed findings which invites further in-depth research. Limits of the study can be found in selected indicators and the short period of time analyzed. However, the practical implications are worth considering from the perspective of finding new managerial tools that can better shape the relationship between ESEG disclosures and FP.
Practical implications
ESEG Dindx can be an instrument for managers that can optimize the link between the FP of companies and its sustainable development.
Social implications
ESEG Dindx measures the disclosure degree of ESEG information by the companies listed on Bucharest Stock Exchange (BSE). The main findings of the work confirm a direct, although weak in intensity but statistically significant correlation between ESEG disclosure index, its sustainability component and FP, valid for the entire period.
Originality/value
This study adds value to the existing literature by the proposed research framework, design of ESEG Dindx and the way correlations between variables were investigated.
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Sebastiano Cupertino, Gianluca Vitale and Pasquale Ruggiero
This paper investigates whether and how Directive 2014/95/EU affects financial performance as well as its moderation effect on the relationship between financial and non-financial…
Abstract
Purpose
This paper investigates whether and how Directive 2014/95/EU affects financial performance as well as its moderation effect on the relationship between financial and non-financial performance, involving different stakeholders' perspectives.
Design/methodology/approach
We adopted the panel data approach to perform random effects regression analysis on a sample of 435 European listed non-financial companies, considering a timeframe of six years. Furthermore, the moderation effect of the Directive 2014/95/EU on the relationship between financial and non-financial performance has been tested.
Findings
NFD regulation negatively affects firms' operating profitability and shareholder value while produces no effects on debtholders' returns. Nevertheless, the Directive 2014/95/EU has general positive moderating effects on the relationship between non-financial and financial performance, mitigating the direct costs induced by pursuing non-financial performance.
Research limitations/implications
Shifting from mimetic to coercive isomorphism caused a strengthening of the complementarity between financial and non-financial performance dimensions, extending the concept of performance itself. The analysis carried out is limited to a short-term timeframe and on non-financial companies subject to the Directive 2014/95/EU.
Practical implications
The paper highlights trade-offs between the costs induced by non-financial activities and the benefits of being compliant with the non-financial disclosure (NFD) regulation, supporting managers in allocating business resources.
Originality/value
This paper is among the first that investigates the impact of mandatory NFD on the relationship between non-financial and financial performance. It is also one of the earliest in finding some pieces of evidence on the direct impact of Directive 2014/95/EU on EU companies' financial performance.
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Tamanna Dalwai and Mahdi Salehi
This research examines the influence of business strategy and intellectual capital on firm performance and bankruptcy risk of Oman's non-financial sector companies.
Abstract
Purpose
This research examines the influence of business strategy and intellectual capital on firm performance and bankruptcy risk of Oman's non-financial sector companies.
Design/methodology/approach
The data comprises 380 firm-year observations collected from 2015 to 2019 for the non-financial sector companies listed on the Muscat Securities Market. This study measures business strategy using the Miles and Snow typologies and Porter's strategies as alternative measures. The study uses the Granger-causality test to measure the bi-directional causality between independent and dependent variables. The authors use alternative measurements of business strategy and 2SLS/IV estimation to validate the OLS results.
Findings
According to the Miles and Snow typologies, most of Oman's non-financial firms were analyzers. The empirical results show a negative relationship between business strategy and return on equity (ROE), suggesting defender-type strategy leads to an increase in firm performance. The OLS results show no influence of A-VAIC on firm performance and Altman-Z score. The structural capital efficiency is positively associated with ROA, and Altman Z score consistent with the hypothesized relationship. The Granger causality test shows no inference of causality between any independent and dependent variables except for Z score and CEE.
Research limitations/implications
The business strategy results from the firm performance and bankruptcy risk models are valuable to the researchers from an emerging market and non-financial companies' perspective. Oman's diversification strategy of its economic activities through non-financial sector companies receives an impetus through the findings of this study. As this study is limited to Oman's non-financial sector companies, future research on business strategy impact can be extended to the financial sector, other GCC, and emerging countries.
Originality/value
The findings of this study contribute to the sparse literature on business strategy in an emerging market like Oman. This study enriches the knowledge of business strategy typologies proposed by Miles and Snow, and Porter. It also contributes to the extant literature on firm performance and bankruptcy risk.
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Rosa Lombardi, Federico Schimperna, Paola Paoloni and Michele Galeotti
This paper investigates the quality and quantity of climate-related information disclosed by public interest entities (PIEs) in the non-financial disclosure scenario. Thus, this…
Abstract
Purpose
This paper investigates the quality and quantity of climate-related information disclosed by public interest entities (PIEs) in the non-financial disclosure scenario. Thus, this paper aims at drafting the state of the art on what is climate-related information disclosed by PIEs in the changing EU non-financial regulation assuming the Italian scenario and the industrial industry as significant in achieving the research aims.
Design/methodology/approach
The authors used the content analysis composing the sample of 34 large listed companies (i.e. PIEs) belonging to the industrial sector in Italy. The authors choose the Italian PIEs’ sustainability reports published in 2019 after the adoption of the EU directive and its guidelines. The authors adopted a coding and classification system, investigating the climate-related information through a systematic, objective and reliable method. The authors defined 99 indicators along the structure of the European Commission's guidelines and the indicator of disclosure, climate-related information indicator (CII). The framework mainly derives from the corporate disclosure theory and legitimacy and stakeholders' theories.
Findings
The results show the lack of several required climate-related information or a not in-depth presentation of information. Thus, findings are interesting in emphasizing that the current climate-related disclosure is at an early stage in complying with the European Commission's guidelines. Additionally, the findings enlarge previous theories on corporate disclosure, proposing new insights in the light of the recent interest in climate-related information.
Research limitations/implications
Evidence contributes to extending the existing literature, drafting the state of the art of what is the quality and the quantity of the climate-related information in the corporate disclosure in the European scenario.
Practical implications
This paper is directed to propose the state of the climate-related disclosure following the EU directive guidelines, proposing some evidence to support the path toward the integrations of information by several parts (e.g. companies, regulators and so on).
Originality/value
The paper is a useful baseline for academics, practitioners, policy-makers and regulators in understanding actions to adopt in the climate-related disclosure and what could be the impact of forthcoming regulations in the field, also having some metrics (e.g. score value of disclosure, the indicator of climate-related information disclosure – CII).
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Birol Yıldız and Şafak Ağdeniz
Purpose: The main aim of the study is to provide a tool for non-financial information in decision-making. We analysed the non-financial data in the annual reports in order to show…
Abstract
Purpose: The main aim of the study is to provide a tool for non-financial information in decision-making. We analysed the non-financial data in the annual reports in order to show the usage of this information in financial decision processes.
Need for the Study: Main financial reports such as balance sheets and income statements can be analysed by statistical methods. However, an expanded financial reporting framework needs new analysing methods due to unstructured and big data. The study offers a solution to the analysis problem that comes with non-financial reporting, which is an essential communication tool in corporate reporting.
Methodology: Text mining analysis of annual reports is conducted using software named R. To simplify the problem, we try to predict the companies’ corporate governance qualifications using text mining. K Nearest Neighbor, Naive Bayes and Decision Tree machine learning algorithms were used.
Findings: Our analysis illustrates that K Nearest Neighbor has classified the highest number of correct classifications by 85%, compared to 50% for the random walk. The empirical evidence suggests that text mining can be used by all stakeholders as a financial analysis method.
Practical Implications: Combining financial statement analyses with financial reporting analyses will decrease the information asymmetry between the company and stakeholders. So stakeholders can make more accurate decisions. Analysis of non-financial data with text mining will provide a decisive competitive advantage, especially for investors to make the right decisions. This method will lead to allocating scarce resources more effectively. Another contribution of the study is that stakeholders can predict the corporate governance qualification of the company from the annual reports even if it does not include in the Corporate Governance Index (CGI).
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Yasmine M. Ragab and Mohamed A. Saleh
This study examines the effect of non-financial variables related to governance on the accuracy of financial distress prediction among Egyptian listed small and medium-sized…
Abstract
Purpose
This study examines the effect of non-financial variables related to governance on the accuracy of financial distress prediction among Egyptian listed small and medium-sized enterprises (SMEs), by using the logistic regression technique.
Design/methodology/approach
This study used a sample of 24 Egyptian-listed SMEs in each year, totaling 120 firm observations, of which 25 were classified distressed and 95 of them non-distressed between 2014 and 2018. The variables for the study included five financial variables and thirteen non-financial variables related to governance. The models were developed using financial variables alone as well as combining financial and non-financial variables related to governance.
Findings
The results showed that the model with financial variables had a prediction accuracy of 91.7% , whereas models with a combination of financial and non-financial variables related to governance predict with comparatively better accuracy of 92.7 and 93.6% .
Research limitations/implications
Although the results seem to be conclusive, it could be noted that the non-distressed sample was not paired with the distressed sample. Other studies showed that paired samples increase the financial distress prediction rate. Furthermore, due to the small sample size, this study was unable to create a hold-out sub-sample for the accuracy test.
Practical implications
The proposed distress prediction model for SMEs is effective for stakeholders, including banks and other financial institutions, in the assessment of the credit risk of SMEs. Using such a model, they could better identify SMEs with a higher risk of failure in their lending decisions. Moreover, SME managers' could be interested in using such models as a tool for planning corrective action, in addition to planning and controlling current operations to avoid financial failure in the future.
Originality/value
This study contributes to financial distress prediction literature in different ways. First, few studies were conducted in the area of financial distress among SMEs. Second, neither of these studies was conducted within the Egyptian context, nor any of them had used non-financial variables related to governance in the prediction of financial distress among SMEs.
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To investigate the relations between company‐specific financial factors and the capital structure decisions of Estonian non‐financial companies and to examine behavioral…
Abstract
Purpose
To investigate the relations between company‐specific financial factors and the capital structure decisions of Estonian non‐financial companies and to examine behavioral differences between companies of different sizes.
Design/methodology/approach
Totally 260 Estonian non‐financial companies are divided into small‐, medium‐ and large‐companies, each sample being analysed by correlation‐regression method in two aspects – impact of financial factors on static capital structure and capital structure dynamics. Companies' financial statements of 2002/2003 or 2003/2004 are used. Finally, capital structure adjustments in extreme boundaries are analyzed.
Findings
Capital structure decisions among Estonian non‐financial companies are driven by the pecking order theory, the evidences supporting optimal capital structure choices in long run remain weak. The robustness of the pecking order behavior significantly differs between smaller and bigger companies.
Research limitations/implications
Limited number of companies surveyed due to hard manual work required to adjust financial accounts. Implication of findings is somewhat limited as the study covers a single country.
Originality/value
The paper helps to identify financial drivers and to understand motivations behind capital structure decisions of emerging market companies and it supplements earlier studies. Quasi‐equity debt distorts the observed capital structures. Capital structure is adjusted for operating leases and quasi‐equity debt to identify true amount put at risk and its mix between owners and external lenders.
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Cláudia Pinto, Graça Azevedo and Jonas Oliveira
The present chapter tries to assess the state of art of enterprise risk management (ERM) among Portuguese non-financial companies regarding two main aspects: the ERM background in…
Abstract
The present chapter tries to assess the state of art of enterprise risk management (ERM) among Portuguese non-financial companies regarding two main aspects: the ERM background in Portugal and the level of disclosure of ERM practices by non-financial listed companies. Since the analysis of disclosures is useful to understand the level of evolution and adoption of ERM framework we tried to assess the ERM practices disclosed by 26 Portuguese non-financial listed companies at the Euronext Lisbon Stock Exchange regulated market, during the period of 2006–2016. Main findings indicate that regulation on ERM in Portugal emanates from three main Codes (The Portuguese Companies Code, The Stock Exchange Code, and The Corporate Governance Code). The ERM professionalization in Portugal is its infancy and has been promoted mainly by the Institute of Portuguese Internal Auditors. Moreover, research on topics such as risk reporting and risk management/ERM is very scarce. Overall, findings of prior literature are consistent with results from our exploratory study. We conclude that Portuguese non-financial listed companies still disclose very little information on ERM activities. However, over the period of analysis, the disclosure practices evolved positively. Findings show that ERM disclosure can still be extensively improved in the future.
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Cornelie Crous, Enrico Battisti and Erasmia Leonidou
The purpose of this paper is to examine the different aspects of non-financial reporting that may influence company financial performance. In particular, the authors present an…
Abstract
Purpose
The purpose of this paper is to examine the different aspects of non-financial reporting that may influence company financial performance. In particular, the authors present an integrated framework of these features that have a direct impact on the financial sustainability of firms for future researchers to further explore and expand the boundaries of the domain.
Design/methodology/approach
A systematic literature review of peer-reviewed papers, covering the period 2015–2020, was done, and 41 paper were identified and analysed via a thematic review, to identify variables that either positively or negatively impact on the financial performance of listed companies. The literature focuses on disclosures related to integrated reporting disclosures, sustainability disclosures (also called corporate social responsibility (CSR) disclosures) and corporate governance disclosures. A synthesised inter-textual coherence strategy has been followed during the interpretation of the findings.
Findings
The results of the synthesised inter-textual coherence strategy were the development of an integrated framework, which indicates that the inclusion of control variables in regression analysis has no impact on the direction of the relationship between quality reporting and financial reporting.
Originality/value
To the best of the authors’ knowledge, this paper is the first to provide a comparison between the impact of the different types of reporting and financial sustainability.
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