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Article
Publication date: 1 February 1986

Michael J. Thomas

The conceptual problem associated with marketing productivity analysis is examined followed by an examination of currrent practice in marketing productivity in the…

Abstract

The conceptual problem associated with marketing productivity analysis is examined followed by an examination of currrent practice in marketing productivity in the following areas — on the product line, in advertising and promotional mix, in the salesforce, in distribution and in customer activity tracking. It provides UK companies with some guidance on how they can improve their performance measurement using marketing information systems and reorganising existing information for more effective marketing action. The research concentrates on 50 well‐known British companies in oil, chemicals, various engineering disciplines, food, pharmaceuticals, insurance, construction and chain‐store retailing. The findings are based on 28 viable responses, and a further 21 (different) responses from companies which were personally visited. Although the research techniques need to be refined they conclude that the management of resources invested in marketing activities can never be refined to the point where an incremental investment in any specific marketing application can be measured with great accuracy. Yet a great deal of measurement is possible and marketing managers can be well enough informed about the behaviour of marketing inputs so that allocation decisions in future periods will benefit.?

Details

Marketing Intelligence & Planning, vol. 4 no. 2
Type: Research Article
ISSN: 0263-4503

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Article
Publication date: 1 March 2011

Maria C.A. Balatbat, Cho‐Yi Lin and David G. Carmichael

Construction businesses are perceived uncertainly by investors, and are generally assumed to represent more risk than other businesses. Added to this is the perception of…

Abstract

Purpose

Construction businesses are perceived uncertainly by investors, and are generally assumed to represent more risk than other businesses. Added to this is the perception of poor business management practices being adopted by construction companies, sometimes resulting in business‐failure. Fluctuations in construction workload contribute to investor anxiety. In this light, the paper aims to present a study of the comparative management efficiency performance of construction companies.

Design/methodology/approach

Publicly listed Australian construction companies over the ten‐year period 1998‐2007 are examined. Performance is compared with a select number of “blue chip” companies as a benchmark. In total, 19 management efficiency measures are used including asset management ratios, debt and safety ratios, and cash flow ratios. The construction companies used in the study engage in work covering the full range of construction activities.

Findings

The results indicate that construction companies perform as well as, and in some cases better than, other businesses, dispelling some of the misconceptions about construction businesses.

Originality/value

The paper's finding will be useful to those investing in the construction industry, and will lead to a better public perception of construction businesses.

Details

Engineering, Construction and Architectural Management, vol. 18 no. 2
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 March 1995

Avi Rushinek and Sara F. Rushinek

Presents a case study demonstrating financial statement ratioanalysis (FSRA). This analysis matches company to industry data andbuilds sales forecasting models. FSRA…

Abstract

Presents a case study demonstrating financial statement ratio analysis (FSRA). This analysis matches company to industry data and builds sales forecasting models. FSRA imputes forecast standards of sales and costs, and applies them to a budgeted financial statement variance analysis for the EE (electronic and electrical) industry. Develops the concept of industry base standards, integrating them into the more traditional statistical and accounting concepts of quality control standards. Provides an implementation example, and reviews possible improvements to the current methodology and approach. Uses a similar methodology to forecast the stock market value with some exceptions. Models sales and costs of an individual company and an industry based largely on aggregate industry databases. For this purpose, uses a multivariate linear trend regression analysis for the sales forecasting model. Defines and tests related hypotheses and evaluates their significance and confidence levels. For an illustration uses the EE industry and the APM company. Also demonstrates a microcomputer‐based FSRA software that speeds, facilitates, and helps to accomplish the stated objectives. The FSRA software uses industry financial statement databases, computes financial ratios and builds forecasting models.

Details

Managerial Auditing Journal, vol. 10 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 17 May 2011

Norhani Aripin, Greg Tower and Grantley Taylor

This paper aims to examine the extent of financial ratio communication from an agency theory perspective.

Abstract

Purpose

This paper aims to examine the extent of financial ratio communication from an agency theory perspective.

Design/methodology/approach

An empirical positivist approach is utilised to explore the predictors of disclosure within the 2007 annual reports of 300 Australian listed companies.

Findings

Overall, the extent of financial ratio disclosures is very low (5.3 per cent) with more extensive disclosures within the sub‐categories of share market measure, profitability and capital structure. A far lower liquidity and cash flow ratio information is reported. Larger firms with more dispersed share ownership provide more extensive financial ratio information than the others. Further, profit‐making firms and Big4 clients exhibit more extensive financial ratio disclosures. Resources firms present significantly lower incidents of financial ratio than the financials and services sector. Corporate governance and capital management initiatives do not have predictive properties.

Originality/value

Financial ratio disclosure, although important, is under‐researched. A comprehensive set of predictors are investigated. The findings highlight the need for Australian regulators to consider more explicit guidelines or mandatory requirements.

Details

Asian Review of Accounting, vol. 19 no. 1
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 11 June 2020

Hamid Zarei, Hassan Yazdifar, Mohsen Dahmarde Ghaleno and Ramin azhmaneh

The purpose of the paper is to investigate the extent to which a model based on financial and non-financial variables predicts auditors' decisions to issue qualified audit…

Abstract

Purpose

The purpose of the paper is to investigate the extent to which a model based on financial and non-financial variables predicts auditors' decisions to issue qualified audit reports in the case of companies listed on the Tehran Stock Exchange (TSE).

Design/methodology/approach

The authors utilized data from the financial statements of 96 Iranian firms as the sample over a period of five years (2012–2016). A total of 480 observations were analysed using a probit model through 11 primary financial ratios accompanying non-financial variables, including the type of audit firm, auditor turnover and corporate performance, which affect the issuance of audit reports.

Findings

The results demonstrated high explanatory power of financial ratios and type of audit firm (the national audit organization vs other local audit firms) in explaining qualifications through audit reports. The predictive accuracy of the estimated model is evaluated using a regression model for the probabilities of qualified and clean opinions. The model is reliable, with 72.9% accuracy in classifying the total sample correctly to explain changes in the auditor's opinion.

Research limitations/implications

This study contains some limitations. First, it is likely that similar researches in developed countries set a large sample (e.g. over 1,000 firms) including more years, but the authors cannot follow such a trend due to data access restrictions. Second, banks and financial institutions, investment and holding firms are removed from the sample, because their financial structure is diverse. The third limitation of the study represents the different economic and cultural conditions of Iran compared to other countries. Future studies could focus on internal control material weaknesses or earnings management to predict audit opinion in emerging economies including Iran.

Practical implications

The paper has practical implications and can assist auditors in identifying factors motivating audit report qualifications, mainly in emerging economies.

Originality/value

The paper contributes to auditing research, since very little is known about the determinants of audit opinion in emerging markets including Iran; it also constitutes an addition to previous knowledge about audit opinion in the context of TSE. The paper is one of the rare studies predicting auditor opinions using both financial variables and non-financial metrics.

Details

Journal of Accounting in Emerging Economies, vol. 10 no. 3
Type: Research Article
ISSN: 2042-1168

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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…

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

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Article
Publication date: 7 July 2020

Yi Feng, Abeer Hassan and Ahmed A. Elamer

This paper aims to contribute to the existing capital structure and board structure literature by examining the relationship among corporate governance, ownership…

Abstract

Purpose

This paper aims to contribute to the existing capital structure and board structure literature by examining the relationship among corporate governance, ownership structure and capital structure.

Design/methodology/approach

The paper uses a panel data of 595 firm-year observations from a unique and comprehensive data set of 119 Chinese real estate listed firms from 2014 to 2018. It uses fixed effect and random effect regression analysis techniques to examine the hypotheses.

Findings

The results show that the board size, ownership concentration and firm size have positive influences on capital structure. State ownership and firm profitability have inverse influences on capital structure.

Research limitations/implications

The findings suggest that better-governed companies in the real estate sector tend to have better capital structure. These findings highlight the unique Chinese context and also offer regulators a strong incentive to pursue corporate governance reforms formally and jointly with the ownership structure. Finally, the results suggest investors the chance to shape detailed expectations about capital structure behavior in China. Future research could investigate capital structure using different arrangement, conducting face-to-face meetings with the firm’s directors and shareholders.

Practical implications

The findings offer support to corporate managers and investors in forming or/and expecting an optimal capital structure and to policymakers and regulators for ratifying laws and developing institutional support to improve the effectiveness of corporate governance mechanisms.

Originality/value

This paper extends, as well as contributes to the current capital structure and corporate governance literature, by proposing new evidence on the effect of board structure and ownership structure on capital structure. The results will help policymakers in different countries in estimating the sufficiency of the available corporate governance reforms to improve capital structure management.

Details

International Journal of Accounting & Information Management, vol. 28 no. 4
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 5 March 2018

Benedikt Quosigk and Dana A. Forgione

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation…

Abstract

Purpose

The purpose of this paper is to investigate donor responses to discretionary accounting information consolidation. Nonprofit (NP) financial statement consolidation discretion significantly impacts program ratio reporting, the primary NP performance measure. Stakeholders are misled to allocate limited resources inefficiently. While some NPs file group Internal Revenue Service (IRS) Form 990 returns with their affiliates, effectively providing consolidated statements, others choose to file independently of their affiliates.

Design/methodology/approach

The authors use OLS regression analysis and panel data for 5,697 NP-year observations for the period 2009-2011 retrieved from the National Center for Charitable Statistics Form 990 database.

Findings

The authors find evidence that consolidation discretion substantially impacts donor decisions. NP managers have incentive to utilize consolidation discretion to influence charitable giving.

Practical implications

The authors urge the IRS and the Financial Accounting Standards Board to reconsider the consolidation guidance for NP organizations, to develop performance measures beyond the widely used program ratio, and to require program ratio segment reporting to allow for better comparability among NPs irrespective of consolidation status. Further, the authors caution stakeholders to consider supporting organization transactions in their resource allocation decisions.

Originality/value

The authors are the first to use NP supporting organization information to investigate consolidation discretion and its impact on donor responses.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 30 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 30 October 2018

John Killingsworth and Mohammed Hashem Mehany

Despite economic growth in the construction sector of the USA, profit margins are persistently low. An examination of collection practices of over 400 construction firms…

Abstract

Purpose

Despite economic growth in the construction sector of the USA, profit margins are persistently low. An examination of collection practices of over 400 construction firms revealed a high number of firms with a collection period ratio above 30 days. This study aims to examines the variance between collection period ratio (days in accounts receivables, DAR) and days in accounts payables (DAP) and its correlation with profitability ratios [e.g. gross profit margin (GPM) and net profit margin (NPM)].

Design/methodology/approach

Descriptive statistics were used to observe trends over three years of financial reporting (2013 through 2016), while correlation statistics were used to understand relationship or association between the different financial ratios and the collection period variance (CPV). Respondent firms were stratified by the North American Industry Classification System, company type and revenue size.

Findings

Conventional theory holds that increasing financial expenses because of collections negatively impacts profitability. Therefore, the hypothesis of the study suggested a statistical correlation between the CPV and profitability measures. Results of the study, however, supported the null hypothesis. Reasons for the lack of correlation are considered as well as necessary follow-up studies before rejecting the hypothesis.

Originality/value

No such study was found specific to the construction industry, and as such, this study contributes to better understanding the implications of extensive collection periods. Further, this study contradicts assumptions about the behavior of the construction industry and the causal relationship between extensive collection periods and profitability.

Details

Journal of Financial Management of Property and Construction, vol. 23 no. 3
Type: Research Article
ISSN: 1366-4387

Keywords

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Article
Publication date: 1 January 1994

Hamdi F. Ali and Abdelrazzak Charbaji

The application of factor analysis to the area of financial ratio analysis was pioneered by Pinches, Mingo, and Caruthers (1973) in a study of U.S. industrial firms…

Abstract

The application of factor analysis to the area of financial ratio analysis was pioneered by Pinches, Mingo, and Caruthers (1973) in a study of U.S. industrial firms. During the last two decades numerous studies have applied the technique as a means of eliminating redundancy among financial ratios and/or reducing the number of ratios selected as a basis for further investigation to a limited but crucial subset. It is observed that all studies reported were on the manufacturing and retailing sectors. The international commercial airline sector was chosen as the subject of the present research in an attempt to study the factor groupings in a sector whose financial characteristics differ from manufacturing or retailing. Results show that factor categorization reflects the sector's financial characteristics. The study also draws conclusions on some observed differences between the empirical and theoretical ratio classification observed in the literature. The study lends support to the conclusion that factor analysis provides a useful means by which to develop and test the theoretical structure and grouping of financial ratios.

Details

International Journal of Commerce and Management, vol. 4 no. 1/2
Type: Research Article
ISSN: 1056-9219

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