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1 – 10 of 118Joseph Opuni-Frimpong, Justice Oheneba Akomaning and Richmond Ofori-Boafo
The purpose of this study is to examine the impact of environmental disclosures (END) on the corporate financial performance (CFP) of listed companies in Ghana before and during…
Abstract
Purpose
The purpose of this study is to examine the impact of environmental disclosures (END) on the corporate financial performance (CFP) of listed companies in Ghana before and during the Banking crisis (BKC) and the COVID-19 pandemic (COV).
Design/methodology/approach
This study used data from 16 companies listed on the Ghana Stock Exchange between 2012 and 2021. The END Index was used, which uses percentile ranking and is guided by Global Reporting Initiative guidelines. A diverse set of empirical tests were used to examine whether ENDs affect CFP during crises.
Findings
The study offered support for the stakeholder and signaling theories generally applied to the study of END. The results confirmed that ENDs have a significant positive effect on CFP measures, return on equity and earnings per share, before and during the crises. The BKC and COV had no impact on the CFP.
Practical implications
As Ghana is still recovering from the 2017 to 2020 BKC and COV, the findings of this study highlight the need for managers to embrace END reporting and engagement strategies to improve CFP and firm reputation.
Originality/value
To the best of the authors’ knowledge, this study is the first to examine the effect of END on CFP in the context of before and considering the Ghanaian BKC and COV. In addition, it is one of the few studies that investigates how ENDs affect the CFP of Ghanaian-listed firms.
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Cong-Hoang Nguyen, Mandisa Greene and Shu-Hsing Wu
This study aims to explore the relationship between board diversity and financial performance, examining how the presence of women on corporate boards affects metrics such as…
Abstract
Purpose
This study aims to explore the relationship between board diversity and financial performance, examining how the presence of women on corporate boards affects metrics such as profitability. In addition, this study investigates how corporate governance and ownership structure influence gender diversity policies and the appointment of women to boards.
Design/methodology/approach
Two hypotheses were proposed and following regression models were developed for data analysis. The sample for this study consists of companies listed on the Taiwan Stock Exchange in five years (2015–2019). The data was extracted from the Taiwan Economic Journal Taiwan database with the final data set comprised 9,379 firm-year observations.
Findings
This study indicates a positive association between board diversity and financial performance. Moreover, the relationship between female directors on the board and financial performance is stronger for firms with a higher percentage of institutional investors.
Originality/value
By highlighting how gender-balanced boards and engaged institutional shareholders improve profitability, this study suggests that actively recruiting women directors and pursuing governance reforms that empower shareholders can pay dividends for Taiwanese companies. The results make an important contribution to the limited research on diversity's impact within Asian corporate settings.
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Sandeep Kumar and Amandeep Verma
The current study immerses in the realm of bank mergers among prominent PSBs in India, focusing on the financial performance of six recently merged PSBs entities. Amidst the…
Abstract
Purpose
The current study immerses in the realm of bank mergers among prominent PSBs in India, focusing on the financial performance of six recently merged PSBs entities. Amidst the global impact of the COVID-19 pandemic on economies, the study aims to uncover the efficiency of these PSBs in navigating this unprecedented crisis.
Design/methodology/approach
The evaluation encompasses panel data on an annual basis spanning from 2020 to 2023. To assess the overall efficiency of merged PSBs, the advanced statistical technique like one-step system generalized method of moments has been applied to estimate its efficiency.
Findings
The study findings affirm that PSB mergers have bolstered financial metrics and efficiency. Enhanced return on equity (ROA) and net profit margin (NPM) signify improved profitability and efficiency. The consolidation also facilitates better asset management and utilization. Moreover, merged entities benefit from economies of scale, cost efficiencies, risk diversification, technological investments, and overall performance improvements.
Practical implications
The study's policy suggestions stress ongoing consolidation efforts to boost banking sector resilience, advocating for improved efficiency, governance, and asset quality management. These steps are crucial for successful bank mergers and fostering a robust, competitive banking landscape in India.
Originality/value
This study is a novel attempt to analyze Indian bank profitability and efficiency post PSB mergers amid COVID-19 pandemic. In a developing country like India, especially in PSBs has experienced significant structural changes over the previous 7 years just before pandemic, such a study necessitates a prompt empirical investigation.
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Amitava Mondal and Somnath Bauri
Transitioning to a low-carbon economy requires a positive response by society, including business organizations, towards the green concept and also requires the implementation of…
Abstract
Purpose
Transitioning to a low-carbon economy requires a positive response by society, including business organizations, towards the green concept and also requires the implementation of long-term green strategies. These requirements could impose various transition risks on the sustainable development of the firms; hence, the present study aims to examine the impact of climate transition risk on a firm’s financial performance and market value creation from the Indian perspective.
Design/methodology/approach
We have considered the firm-level environmental risk score (ERS) to evaluate the sensitivity of a firm’s profitability (measured by ROA & ROE) and market value (measured by Tobin’s Q) towards the climate transition risk. The present study used multiple regression analysis to examine the impact of climate transition risk on the firm’s financial performance and market value creation, as evidenced by Nifty 50 companies.
Findings
The empirical results suggested that corporate climate transition risks have been positively associated with the firm’s financial performance indicators but negatively impacted the firm’s market value creation in the case of select Indian-listed firms. Hence, our results indicate that with the increase of firm-level climate transition risk, the firm’s financial performance increases but negatively affects the firm’s market value creation. The robustness tests have also confirmed the same results and supported our analysis.
Originality/value
The present paper contributes to the existing literature on climate risks and firms’ performance by providing insights about firms’ sensitivity towards climate transition risk from the Indian perspective.
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Mirza Muhammad Naseer, Yongsheng Guo and Xiaoxian Zhu
This study aims to examine the relationship between environmental, social and governance (ESG) disclosure, firm risk and stock market returns within the Chinese energy sector…
Abstract
Purpose
This study aims to examine the relationship between environmental, social and governance (ESG) disclosure, firm risk and stock market returns within the Chinese energy sector. Using a variety of econometric techniques, the study seeks to uncover the impact of ESG disclosure on risk mitigation and its influence on stock market performance.
Design/methodology/approach
Benchmark regression models were used to explore the associations between ESG disclosure, firm risk and stock returns. To address potential endogeneity, a generalised method of moments estimator is used. Quantile regression was used for robustness analysis.
Findings
The study reveals a negative relationship between ESG disclosure and firm risk, indicating that companies with greater ESG disclosure tend to experience reduced risk exposure. In addition, a positive association is observed between ESG disclosure and stock market returns, suggesting that companies with more comprehensive ESG disclosure practices tend to perform better in the stock market.
Research limitations/implications
This study implies that investors appreciate sustainable investment and incorporate ESG practices and disclosure in decision-making. Policymakers can promote transparent ESG reporting through regulatory frameworks, fostering sustainable practices in the energy sector.
Originality/value
Despite the mounting concerns over carbon dioxide emissions and the energy industry’s environmental footprint, this study pioneers a comprehensive analysis of ESG disclosure within this critical sector. Delving into the relationship of ESG practices, firm risk and market returns, this research uniquely examines both risk mitigation and return enhancement, shedding new light on sustainable strategies in the energy domain.
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Antonio Lopo Martinez, Raimundo da Silva and Alfredo Sarlo Neto
This study aims to explore the interplay between market concentration and implicit tax burdens in Brazil, offering a fresh perspective on the conventional belief of perfect…
Abstract
Purpose
This study aims to explore the interplay between market concentration and implicit tax burdens in Brazil, offering a fresh perspective on the conventional belief of perfect competition.
Design/methodology/approach
Data was sourced from Brazilian firms on the B3 stock exchange between 2011 and 2021. Multiple linear regression techniques were employed to analyze the relation of explicit tax rates to firms’ pre- and post-tax returns.
Findings
Dominant firms in the market tend to bear a lower implicit tax burden and have the capacity to extend tax incentive benefits to shareholders.
Research limitations/implications
The findings highlight Brazil’s intricate corporate tax fabric, particularly regarding implicit taxes. They provide a foundation for deeper inquiries into how market dominance, taxation policies, and corporate strategies converge.
Practical implications
Regulators and business leaders can harness this knowledge to recalibrate tax strategies and market regulations. Specifically, a closer examination of the dynamics that permit reduced implicit tax implications in monopolized markets is essential for equity.
Social implications
Companies with pronounced market concentration can mitigate their implicit tax burdens, potentially offloading them to consumers and suppliers. This points to potential inequities in current tax structures.
Originality/value
This research unveils nuanced insights into Brazil’s multifaceted interrelations between corporate influence, taxation strategies, and market forces.
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Rajesh Kumar Bhaskaran, Sujit K Sukumaran and Kareem Abdul Waheed
This study aims to examine whether social initiatives adopted by firms lead to improved financial performance. The authors analyse the impact of different elements of social…
Abstract
Purpose
This study aims to examine whether social initiatives adopted by firms lead to improved financial performance. The authors analyse the impact of different elements of social initiatives on wealth creation for firms in terms of operating and market performance.
Design/methodology/approach
The study is based on the social initiative scores of over 4,500 firms collected from Thomson Reuters' ESG database. The study uses two-stage least squares (2SLS) to analyse the relationship between social initiatives and firm performance.
Findings
Profitable, mature, capital intensive and firms with high sales growth rate tend to invest more in social initiatives. Firms with high agency costs invest in social initiatives for workforce efficiency, maintaining human rights and product responsibility. The study documents evidence that social investments are value creating mechanism for firms which leads to improved financial performance in terms of operating and stock market performance. Firms with high dividend intensity invest in social initiatives for workforce welfare and human rights initiatives. Investment in employee well-being and community initiatives results in intangible benefits such as improved stock market valuation.
Practical implications
The research model has not considered the impact of intervening variables to understand the relationship between corporate social performance and corporate financial performance.
Social implications
Firms ought to recognize that social investment is beneficial in terms of value creation of firms as stock market perceive such investments favourably. Firms must focus more on community development initiatives and workforce initiatives for the value creation of firms compared to investments directed towards human rights initiatives and product responsibility initiatives.
Originality/value
This study focusses exclusively on the social dimension of the CSR activities. The authors examine the impact of social welfare scores on firm performance by analysing the valuation effects on scores representing workforce, human rights, community and product responsibility. Moreover, the paper also examines the impact of a new dimension of product responsibility on firm performance. They also focus on both aspects of financial performance in terms of operating performance (proxied by ROE) and the joint impact of both operating and market performance (proxied by Tobin’s Q). This paper contributes to the research on the linkage of social performance to financial performance by observing that firms with high agency cost characteristics tend to invest in social initiatives for work force efficiency, maintaining human rights and product responsibility.
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Valentina Beretta, Maria Chiara Demartini and Sara Trucco
Despite the rising trend of sustainable developmental goals (SDGs) incorporation into sustainability reporting, there remains a gap in understanding the role of SDG disclosure…
Abstract
Purpose
Despite the rising trend of sustainable developmental goals (SDGs) incorporation into sustainability reporting, there remains a gap in understanding the role of SDG disclosure (SDGD) in the relationship between sustainability and financial performance. Thus, this study aims to investigate the relationship between sustainability performance and the level of SDGD; the relationship between sustainability performance and financial performance; and the link between the level of SDGD and financial performance.
Design/methodology/approach
Conducted in Italy, the analysis involves manual collection of sustainability reports from company websites for the fiscal years from 2019 to 2022, followed by textual analysis to identify SDG-related content disclosed in nonfinancial reports. Financial and nonfinancial data from Orbis and LSEG databases are used for regression analysis on panel data.
Findings
Findings align with existing literature, emphasizing the partial mediator role played by the level of SDGD in the relationship between sustainability performance and financial performance, measured by return on equity. In addition, the study suggests that there is a positive relationship between sustainability performance and the level of SDGD and a positive relationship between the level of SDGD and financial performance.
Originality/value
This study contributes to a deeper understanding of how SDG disclosures function within the broader nexus of sustainability performance and financial outcomes. Findings from this study provide empirical support for the argument that SDGD is not merely a regulatory compliance tool but also a strategic asset that can enhance a firm’s financial performance.
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Basel Al-Shaer, Hassan H.H. Aldboush and Ahmad Hisham H. Alnajjar
This paper aims to examine the relationship between corporate governance mechanisms and firm performance in Qatari non-financial firms over a nine-year period, including the…
Abstract
Purpose
This paper aims to examine the relationship between corporate governance mechanisms and firm performance in Qatari non-financial firms over a nine-year period, including the period of high uncertainty caused by the COVID-19 pandemic.
Design/methodology/approach
The study uses data from Refinitiv and employs panel data econometric techniques, namely generalized least squares (GLS), to analyze the impact of board characteristics (board size, board meetings, board gender diversity, board-specific skills, board independence), audit committee features (existence of audit committee, audit committee independence), CEO duality and management scores on both accounting and market performance of Qatari firms. Control variables include firm size, age, leverage and industry classifications.
Findings
The findings suggest that board-specific skills positively influence firm performance, while board size and gender diversity exhibit a non-significant impact. Audit committee independence enhances accounting performance but does not significantly affect market performance. Surprisingly, management scores show a significant yet negative impact on certain financial measures, indicating the need for further investigation.
Practical implications
These insights provide valuable guidance for policymakers, investors and corporate leaders, emphasizing the importance of tailored governance practices in Qatar's unique business landscape.
Originality/value
This study provides unique insights into the governance-performance relationship in the context of Qatar, a region with limited existing research. The inclusion of the COVID-19 period adds a contemporary dimension to the analysis, highlighting the resilience and adaptability of corporate governance practices during times of crisis.
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Paolo Agnese, Rosella Carè, Massimiliano Cerciello and Simone Taddeo
This paper investigates the relationship between commitment to ESG practices and firm performance using a synthetic index based on ESG disclosure and ESG performance scores.
Abstract
Purpose
This paper investigates the relationship between commitment to ESG practices and firm performance using a synthetic index based on ESG disclosure and ESG performance scores.
Design/methodology/approach
Using the Mazziotta-Pareto aggregation method, we develop a novel synthetic index of ESG engagement based on ESG rating and disclosure. This index is employed in a dynamic panel regression, implemented using the Arellano-Bond estimator, to explain profitability in a sample of 146 listed Canadian firms over the period spanning from 2014 to 2021.
Findings
ESG practices may either foster or hinder firm performance. In particular, a synergy emerges between the social and environmental dimensions of ESG practices, shedding light on the relevance of high standards in terms of environmental and social activities.
Practical implications
The study emphasizes the significance of acknowledging the various facets of ESG engagement and the necessity of transcending the current constraints of accessible ESG data and ratings. Synthetic indices combining different types of ESG information may contribute to mitigating the problems created by strategic disclosure on the part of firms, which typically results in undesirable practices such as greenwashing and social washing.
Originality/value
This is the first study that applies the Mazziotta-Pareto method to develop a synthetic index of ESG engagement, tackling each pillar separately. Moreover, when investigating the effect of ESG engagement on profitability, we allow for cross-pillar synergies and/or trade-offs.
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