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Article
Publication date: 15 February 2013

Carolin Schellhorn and Rajneesh Sharma

The purpose of this paper is to evaluate firm financial success across a broad range of performance measures and identify areas of the performance spectrum for which…

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Abstract

Purpose

The purpose of this paper is to evaluate firm financial success across a broad range of performance measures and identify areas of the performance spectrum for which positive results were most difficult to achieve. Simultaneously, the authors identify the firms that most frequently ranked among the top five in terms of composite financial performance.

Design/methodology/approach

The dichotomous Rasch model was applied to 13 financial ratios for two industries for the years 2002‐2011. Of these ratios, the authors identify those that are consistent with the requirements of the Rasch model and suitable for ranking composite firm financial performance in each industry during the sample years. Ratio difficulty rankings are obtained, along with firm rankings reflecting managers' ability to achieve broad‐based financial success.

Findings

For the Foods and Aerospace/Defense industries during 2002‐2011, above average performance was most difficult to achieve in the areas of liquidity, financial leverage, and market valuation. Above average profitability and returns on investment seem to have been easier performance targets during this sample period. The authors also list the ticker symbols of firms with managers who consistently achieved top overall financial performance.

Research limitations/implications

The performance data for each industry and time period have to fit the requirements of the Rasch model. In addition, it must be possible to translate continuous metric readings into binary measures without losing relevant information. Future research might explore the use of more sophisticated Rasch models, measures of non‐financial firm performance dimensions, additional industries and time periods.

Practical implications

This research offers managers, investors and regulators a fresh perspective on the evaluation of firm financial performance and managerial ability.

Social implications

Rasch models are widely used in the human sciences. Application of this methodology to firms offers a more comprehensive view of firm performance and may reveal factors relevant to firm valuation that have previously been ignored, thus possibly impacting the allocation of capital across firms and industries.

Originality/value

To the authors' knowledge, this research represents a first attempt to apply the Rasch approach to an evaluation of managerial ability as reflected in a firm's overall financial performance.

Details

Managerial Finance, vol. 39 no. 3
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 14 April 2014

Halimahton Borhan, Rozita Naina Mohamed and Nurnafisah Azmi

The purpose of this paper is to examine the impact of financial ratios on the financial performance of a chemical company: LyondellBasell Industries (LYB). Some selected…

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4608

Abstract

Purpose

The purpose of this paper is to examine the impact of financial ratios on the financial performance of a chemical company: LyondellBasell Industries (LYB). Some selected ratios: current ratio (CR) and quick ratio (QR) represent the liquidity ratios, debt ratio (DR) and debt equity ratio (DTER) represent the leverage ratios, while operating profit margin (OPM) and net profit margin (NPM) represent the profitability ratios. LYB faced financial problems after its merger and the financial performance of the company shrank to negative due to the world financial crisis. However, this company has bounced back after a year and is now the world's third largest chemical company based on revenue.

Design/methodology/approach

The financial ratios were measured from 2004 to 2011, quarterly. A multiple regression model has been used and secondary data has been analyzed.

Findings

The results shows that CR, QR, DR and NPM have a positive relationship while DTER and OPM have a negative relationship with the company's financial performance. Among the six ratios, CR, DR and NPM show the highest significant impact on the company's performance.

Originality/value

This research paper contributed the result of the impact of financial ratios on the financial performance of a chemical company as the previous studies with this focus are hard to find and some of the sources are not specifically related to the topic.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 10 no. 2
Type: Research Article
ISSN: 2042-5961

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Article
Publication date: 6 September 2021

Salma Chakroun, Anis Ben Amar and Anis Ben Amar

The purpose of this paper is to examine the impact of earnings management on financial performance. In addition, the authors investigate whether corporate social…

Abstract

Purpose

The purpose of this paper is to examine the impact of earnings management on financial performance. In addition, the authors investigate whether corporate social responsibility has a moderating effect on the impact of earnings management on financial performance.

Design/methodology/approach

The empirical study is based on a sample of French companies listed on the CAC-All-Tradable index over the period 2008–2018. Feasible generalized least square regression method is used to estimate the econometric models.

Findings

Based on panel data of 3,003 French firm-year observations, the authors demonstrate that earnings management has a negative and significant impact on financial performance. Indeed, corporate social responsibility moderates positively the negative impact of earnings management on financial performance in the French context.

Practical implications

The findings have several implications for regulatory, investors and academic researchers. For regulators, it is appropriate to promote more several standards related to corporate social responsibility and earnings management. For investors, considering societal issues is very important in making decisions. For academic researchers, the results show that it is important to discover how corporate social responsibility can influence the relation between earnings management and financial performance.

Originality/value

The existing literature has generally focused on the impact of earnings management on financial performance and the empirical tests did not yield similar results. The study shows that corporate social responsibility has a moderating role in determining the impact of earnings management on financial performance.

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Article
Publication date: 16 September 2021

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…

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.

Details

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

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Article
Publication date: 12 July 2021

Peter Karugu Kahihu, David Muturi Wachira and Stephen Makau Muathe

The purpose of this study was to investigate on managing market risk and financial performance, experience from microfinance institutions (MFIs) in Kenya.

Abstract

Purpose

The purpose of this study was to investigate on managing market risk and financial performance, experience from microfinance institutions (MFIs) in Kenya.

Design/methodology/approach

This study used positivism philosophy and used explanatory non-experimental research designs. The targeted population was all the 13 registered deposit-taking MFIs in Kenya and a census approach was used. The study used secondary data which was collected and analyzed from microfinance Institutions annual audited financial reports for the period between 2014 to 2018. This study was anchored on two theories, namely, resource-based value theory and extreme value theory.

Findings

The results indicated that interest rate and financial leverage risk had a positive significant effect on the financial performance of MFIs in Kenya. Foreign exchange risk was found to have a negative significant effect on the financial performance of MFIs. However, inflation rate risk was found to have no significant effect on the financial performance of MFIs.

Research limitations/implications

This study recommended that the chief executive officers of MFIs should use the mechanism of identifying market risk variables, especially Interest rate, financial leverage and foreign exchange risks to enable them to put the necessary measures to mitigate those risks and enhance the financial performance of MFIs in Kenya.

Originality/value

This study is unique as it touches the microfinance industry which has a steady fast growth in assisting accessibility of financial services to small and medium enterprises. Most of the previous study concentrated on other industry in the financial sector.

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Article
Publication date: 28 August 2021

Parul Munjal and Deergha Sharma

The purpose of this paper is to determine managerial perception on social and environmental performance and its effect on financial performance in the Indian banking…

Abstract

Purpose

The purpose of this paper is to determine managerial perception on social and environmental performance and its effect on financial performance in the Indian banking industry. In addition, the study tests moderating role of gender and experience of bank managers in influencing the association between the constructs.

Design/methodology/approach

The empirical study is conducted using survey methodology. Responses were collected from 182 bank managers covering the private sector, public sector, foreign, regional rural and cooperative banks. Structural equation modelling technique was used to test hypothesized relationships between the constructs using Smart partial least squares software (3.3.2 version).

Findings

Results of the study endorse the stakeholder perspective. Bank managers perceive that involvement in socially responsible practices strengthens the relationship between stakeholders and banks, which eventually improves financial performance. Conversely, results indicate that environmental practices by banks do not influence financial performance, thereby sustaining shareholder perspective. Further, results suggest that gender and experience of bank managers are not effective moderators in determining the relationship between the constructs.

Practical implications

Findings would be valuable for investors to better assimilate social and environmental performance along with its effect on the financial performance of banks. The study would also facilitate policymakers and regulators to outline pertinent policies and rules to uphold financial strength and integrity in the banking industry. Further, bank managers’ perception would have a marked influence on customers’ understanding of social and environmental activities that might shape customer satisfaction, trust, engagement and loyalty.

Originality/value

The study underscores the eminence of endorsing socially responsible practices in the banks. This would facilitate in improving the sustainability in the Indian banking industry.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 17 June 2021

Thomas Anning-Dorson

This paper aims to examine the quadratic relationship between customer involvement capability and performance, and innovation of small- and medium-scale service firms. The…

Abstract

Purpose

This paper aims to examine the quadratic relationship between customer involvement capability and performance, and innovation of small- and medium-scale service firms. The study answers the critical question of how SMEs make the most benefit from their involvement capability.

Design/methodology/approach

Data from small and medium enterprises (SMEs) operating in the service sector of an emerging economy in sub-Saharan Africa were used. A two-stage data analysis with a quadratic estimation was used to assess the hypothesized relationships.

Findings

The study found that the influence of involvement capability over SME performance differs in terms of financial and non-financial. And that, while increasing customer involvement will improve non-financial performance such as customer satisfaction and service quality, it is only at the intermediate level that financial performance is optimized.

Originality/value

The relationships (involvement, and performance and innovation) are not linear, and that at some levels, the relationship with financial or non-financial performance is more positive than other levels. The findings also suggest that involvement capability influences both process and product innovations most at intermediate levels than at low and high levels.

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

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Article
Publication date: 8 June 2021

Yu Chen, Shengbin Hao and A. Li

The critical issue in financial management is investigating the role of government in an organization's economy. Governmental facilities, loans and long-term financial

Abstract

Purpose

The critical issue in financial management is investigating the role of government in an organization's economy. Governmental facilities, loans and long-term financial plans may affect the performance of financial management systems. Financial management systems may be affected by various other factors, such as organizational, technological and governmental factors. Studying and investigating the influence of organizational, technological and governmental factors on financial management systems' performance is the primary goal of this paper.

Design/methodology/approach

Financial management has always been affected by the increasing role of technology. Also, the use of financial software, the entry of computer-based computing and math planning are examples of technology entry to financial management that has led to changes in recent years. Data were collected from the insurance offices through a questionnaire. Distributed questionnaires were conducted on a Likert scale. The causal model has been appraised by the structural equation modeling (SEM) method that has been utilized to assess the validity and reliability of the model. The software has been used to evaluate the questionnaire, and the hypotheses of the research are evaluated using SPSS 22 and SMART-PLS software.

Findings

The results showed that organizational, technological and governmental factors directly affect financial management systems' performance. For this reason, the role of organizational, technological and governmental factors on the success of financial management systems in insurance companies must be considered for decision-making in the future.

Research limitations/implications

This study includes some restrictions required to be examined in assessing the outcomes. First, sample research was selected from the managers of the insurance offices in Harbin, China. So, the sample size is not big, and the generalization of the results is limited. Second, the current research might have ignored other variables, which affect the performance of financial management systems. Future researchers intend to investigate the impact of investments and projects on financial management systems' performance as a proposal. Nevertheless, the subsequent investigation can assess vital factors like investments and plans on financial management systems' performance.

Practical implications

The research also includes insurance companies and all departments and individuals associated with financial management systems somehow.

Originality/value

In the current article, the performance of financial management systems is highlighted, and the method to resolve the issue has been utilized as an experimental example. This article's introduced model supplies a comprehensive framework to investigate the impact of organizational, technological and governmental factors on financial management systems' performance.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

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Book part
Publication date: 9 May 2014

Debbie P. S. Chia, Chong M. Lau and Sharon L. C. Tan

The widespread adoption of the Balanced Scorecard has led to a need to understand how performance measures affect employees’ attitudes and behaviors. Despite the growing…

Abstract

Purpose

The widespread adoption of the Balanced Scorecard has led to a need to understand how performance measures affect employees’ attitudes and behaviors. Despite the growing trend in the implementation of the Balanced Scorecard, there is little research evidence available on the behavioral outcomes resulting from the use of nonfinancial performance measures. This study seeks to address this gap by examining several behavioral outcomes, including job satisfaction, organizational commitment and managerial performance, resulting from the use of financial and nonfinancial performance measures.

Methodology

Data were collected using a mailed questionnaire survey to manufacturing organizations in Singapore. Path analysis technique was employed in this study to investigate the relationships.

Findings

The results of the study show that behavioral outcomes are indifferent regardless of the nature and type of performance measures used. However, the relationships between performance measures and behavioral outcomes are indirect through procedural fairness and trust in supervisor.

Research limitations

Survey questionnaire method was used in this study and there are limitations associated with survey questionnaire method. As our sample was selected from large organizations, it is unclear if our results are generalizable to small organizations. Also, as our sample was selected from the manufacturing sector, generalizing our results to the nonmanufacturing sectors should be made with caution.

Practical implications

This study highlights the need for organizations to pay attention to issues pertaining to procedural fairness and interpersonal trust in the design and implementation of performance measurement systems.

Details

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

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Book part
Publication date: 8 April 2005

Petri Suomala

The essential investments in new product development (NPD) made by industrial companies entail effective management of NPD activities. In this context, performance

Abstract

The essential investments in new product development (NPD) made by industrial companies entail effective management of NPD activities. In this context, performance measurement is one of the means that can be employed in the pursuit of effectiveness.

Details

Managing Product Innovation
Type: Book
ISBN: 978-1-84950-311-2

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