Determinants of profitability in Chinese companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Saleh Alarussi ◽  
Xiaoyu Gao
Keyword(s):  
Firm Size ◽  
Intangible Assets ◽  
Listed Companies ◽  
Financial Ratios ◽  
Debt Ratio ◽  
Financial Industry ◽  
Working Capital ◽  
Content Type ◽  
Leverage Ratio ◽  
Chinese Listed Companies

Purpose This study is conducted to determine the factors that affect profitability in Chinese listed companies (by using financial ratios). Four independent variables liquidity, intangible assets, working capital and company leverage were empirically tested for their relationships with profitability besides two control variables which are firm size and company efficiency.Design/methodology/approach This study used secondary data extracted manually from the annual reports of non-financial Chinese listed companies on the Shanghai stock exchange (http://www.szse.cn/); the data set covers 100 companies during the period of 2017–2019, and a random selection method was used in order to achieve credibility and fairness as much as possible.Findings The findings show firm size, working capital and intangible assets have positive and significant relationships with profitability [return on assets (ROA) and earnings per share (EPS)]. Positive working capital is important to lower the cost of capital and improve companies' profitability. Intangible assets are also an essential source to improve profitability due to their low costs. In addition, the findings display a negative and strong relationship between liquidity and profitability, meaning that companies suffer low profit due to inefficient use of liquid items. Interestingly, leverage, which is measured by debt ratio and leverage ratio, shows mixed results; debt ratio shows a positive and strong association with ROA but not with EPS; while leverage ratio displays a strong but negative association with ROA but not with EPS. These results confirm the inverted U-shape relationship between leverage and profitability, which depends on the balance between benefit and cost of debt.Social implications Profitability is also important for employees and society where business organization provides sustainability and stability for both of them. Employees can then significantly contribute to achieve higher firm's profitability by efficiently using firm's resources.Originality/value This study differs than previous studies in number of aspects: First, this study focuses on financial ratios to explain profitability in Chinese companies. This study provides empirical results about the factors connected to profitability and help stakeholders to make their right decisions. Second, it examines the impact of four independent factors and two control variables that some of them are new in Chinese context such as intangible assets. Third previous studies focus on financial industry such as banks; however, this study focuses on non-financial industry.

scholarly journals Financial ratios and efficiency in Malaysian listed companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Saleh Ahmed Alarussi
Keyword(s):  
Significant Relationship ◽  
Listed Companies ◽  
Financial Ratios ◽  
Annual Reports ◽  
Debt Ratio ◽  
Working Capital ◽  
Efficiency Ratio ◽  
Content Type ◽  
Software Analysis ◽  
Equity Ratio

PurposeThis paper examines the financial ratios that may have a significant effect on the efficiency in Malaysian listed companies. Nine financial ratios measure seven variables which are firm visibility, tangibility, working capital, leverage, liquidity, productivity and profitability.Design/methodology/approachData are collected from 108 public listed companies in Malaysia. The data extracted from companies' annual reports for three years 2012–2014. STATA software analysis is used to examine these relationships.FindingsThe results show each of tangibility and liquidity have negative relationships with efficiency ratio. In against of that, profitability, working capital and productively positively link to efficiency. Leverage which is measured by two ratios – Debt ratio and Debt equity ratio – shows mix results. Debt ratio shows a positive but not significant relationship with efficiency ratio and Debt equity ratio shows a negative significant relationship with efficiency ratio.Practical implicationsThe results benefit companies, investors, economists and governments regulators in Malaysia-to understand the efficiency determinants, so help to make the right decision to enhance the efficiency level in companies which leads to enhance the amount of investments which in turn, enhance the country's economy in general.Originality/valueThis study differs than previous studies number of aspects: first the study covers a three years' period between 2012 and 2014, this period presents the movement of Malaysian current into depreciation with more than 45 percent of its value. Second, in the Malaysia context, this study examines new variables such as firm visibility, tangibility, and productivity. Third, the results of this study will help managers, shareholders, investors, regulators and other parties to make right decisions that will enhance the level of firm efficiency which enhances the investments and the economy of Malaysia.

scholarly journals The Determinants of Capital Structure Decisions: Evidence from Chinese Listed Companies

2018 ◽  
Vol 10 (2) ◽  
pp. 114 ◽  
Author(s):  
Sunitha Vijayakumaran ◽  
Ratnam Vijayakumaran
Keyword(s):  
Developing Countries ◽  
Capital Structure ◽  
Firm Size ◽  
Listed Companies ◽  
Firm Age ◽  
Leverage Ratio ◽  
Listed Firms ◽  
Financial Firms ◽  
Chinese Listed Companies

In this paper, we examine the determinants of leverage in the context of China using a sample of 1844 Chinese non-financial firms over the period 2003 to 2010. This study shows that that the average leverage ratio of Chinese listed firms is similar to those observed in other developing countries. The study also finds thatsize, tangibility,volatilityand firm age are positively and significantly associated with leverage. Furthermore, firm’s profitability has statistically significantnegativeimpact on leverage. Furthermore, we find that we find that firm size, profitability, tangibility, volatility and firm age are the robust determinants of leverage of Chinese listed firms.

Factors affecting profitability in Malaysia

2018 ◽  
Vol 45 (3) ◽  
pp. 442-458 ◽  
Author(s):  
Ali Saleh Alarussi ◽  
Sami Mohammed Alhaderi
Keyword(s):  
Firm Size ◽  
Listed Companies ◽  
Annual Reports ◽  
Current Ratio ◽  
Content Type ◽  
Leverage Ratio ◽  
Factors Affecting ◽  
Turnover Ratio ◽  
Equity Ratio ◽  
Total Sales

PurposeThe purpose of this paper is to examine the factors affecting profitability in Malaysian-listed companies. It has been argued that profitability is the main pillar for any company to survive in the long run. Although profitability is the primary goal of all business ventures, scant attention has been paid to the factors that affect profitability in developing countries. This study investigates the factors affecting profitability in Malaysian-listed companies.Design/methodology/approachThis research is based on five independent variables that were empirically examined for their relationship with profitability. These variables are: firm size (as measured by total sales), working capital (WC), company efficiency (assets turnover ratio), liquidity (current ratio) and leverage (debt equity ratio and leverage ratio). Data of 120 companies listed on Bursa Malaysia covering the period from 2012 to 2014 were extracted from companies’ annual reports. Pooled ordinary least squares regression and fixed-effects were used to analyze the data.FindingsThe findings show a strong positive relationship between firm size (total sales), WC, company efficiency (assets turnover ratio) and profitability. The results also show a negative relationship between both debt equity ratio and leverage ratio and profitability. Liquidity (current ratio) has no significant relationship with profitability.Research limitations/implicationsDue to the time limitation, the data includes only 120 companies listed in bursa Malaysia and covers the period from 2012 to 2014.Practical implicationsThese results benefit internal users (such as mangers, shareholders and employees). They can realize the determinants of enhancing the profitability of their company after the depreciation of the Malaysian currency and therefore concentrate more on the factors that enhance their companies’ profitability. On the other side, other external users (such as investors, creditors, new established companies, tax authority) also may get advantages of these results. It is clear that those users concern about the profitability of companies and the determinants of their profitability after the currency’s depreciation.Originality/valueThis study differs than previous studies in many ways: first, it focuses on non-financial listed companies in Malaysia. Previous studies have concentrated on companies in the financial sector, such as banking and financial institutions or on industrial organizations. Second, this study analyzes the data in companies’ annual reports for a three-year period from 2012 to 2014. During this period, the economy in Malaysia was fluctuating due to currency depreciation. Third, the study used both return on equity and earnings per share as indicators of profitability. Fourth, the results of the study provide empirical evidence that large size firms with efficiently managed assets can improve operating income and ultimately enhance profitability. Last but not least, this study applies the resource-based theory and the trade-off theory.

The effect of intangible assets on sustainable growth and firm value – Evidence on intellectual capital investment in companies listed on Bucharest Stock Exchange

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Catalin Ionita ◽  
Elena Dinu
Keyword(s):  
Growth Rate ◽  
Intellectual Capital ◽  
Firm Value ◽  
Intangible Assets ◽  
Stock Exchange ◽  
Listed Companies ◽  
Sustainable Growth ◽  
Content Type ◽  
Sustainable Growth Rate ◽  
The Impact

PurposeThe present study investigates the connection between company investments in intellectual capital (IC) and how they translate into financial value. The aim is to test the impact of intangible assets on the firm value and its sustainable growth.Design/methodology/approachThe research employs computation models to determine the sustainable growth rate (SGR) and the firm value (FV), and by using the ordinary least squares (OLS) model through a linear regression assesses the relationship between the dependent variables and expenditures on intangibles like R&D, IT programs and patents. A sample of 42 companies has been selected out of the 78 listed at Bucharest Stock Exchange (BSE), based on the appropriateness of the information disclosed in the financial reports for the period 2016–2019.FindingsThe results show that intangibles classified as innovative competences (R&D and Patents) do not have a positive impact on SGR and FV in listed companies from Romania. Moreover, R&D has a negative and significant effect on FV, while IT Programs have a positive and significant impact on FV, but not on the SGR. Variables categorised as economic competencies (Brands, Shares held in associates and jointly controlled entities) and firm structure-specific variables (Leverage, Firm Performance) seem to have a significant effect on SGR and FV. Shares held in associates and jointly controlled entities is the variable that can have the biggest impact when it comes to FV for companies listed at BSE.Research limitations/implicationsDue to non-disclosure of specific information by some companies, or lack of investments in intangibles the sample had to be reduced and does not cover all listed companies.Practical implicationsCompanies listed on the Regulated Market from the Bucharest Stock Exchange should maintain their scale of liabilities at a reasonable level when financing intangible assets in order to ensure corporate long-term and sustainable development. Also, these companies should maintain awareness about the importance of intangible assets and invest more in specific sub-components, in order to sustain competitive advantage. Recognizing the roles of intangibles, managers need to develop strategies to invest in profitable intangibles by reasonably allocating their limited resources, in order to achieve sustainable growth and increase company success.Originality/valueStudies concerning the relation between investments in intangibles and sustainable growth rate and firm value of listed Romanian companies are very scarce. This paper reveals new research, never before undertaken, concerning expenditures on intangibles by Romanian companies and the valuation of such investments on Bucharest Stock Exchange.

Integrated reporting and board characteristics: evidence from top Australian listed companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohamed Omran ◽  
Dinesh Ramdhony ◽  
Oren Mooneeapen ◽  
Vishaka Nursimloo
Keyword(s):  
Firm Size ◽  
Gender Diversity ◽  
Listed Companies ◽  
Board Independence ◽  
Integrated Reporting ◽  
Growth Opportunities ◽  
Content Type ◽  
Board Characteristics ◽  
International Integrated Reporting Council ◽  
Practical Implications

PurposeDrawing upon agency theory, this study analyses the influence of board characteristics on integrated reporting (IR) for the top 50 companies listed on the Australian Securities Exchange (ASX50). Focus is placed on IR at the aggregate level as well as its separate components, namely Future Opportunities and Risks (FOPRI), Governance and Strategy (GOVSTR), Performance (PERF), Overview and Business Model (OBM) and General Preparation and Presentation (GPP).Design/methodology/approachA checklist is devised based on the IIRC (International Integrated Reporting Council) framework to track companies' disclosures for the period from 1st July 2014 to 30th June 2017. Regression analysis is used to investigate the determinants (board size, board independence, activity of the board, gender diversity, firm size, profitability and growth opportunities) of IR and its separate components.FindingsThe findings indicate a significant and positive effect of board independence on the aggregate IR index, FOPRI and GPP. A negative and significant association is found between activity of the board and both the aggregate IR index and its separate components, including GOVSTR, PERF and GPP. Additionally, the aggregate IR index is significantly related to firm size, profitability and growth opportunities.Research limitations/implicationsThe limited sample of 50 companies over three years is the main limitation of the study. The study suffers from an inherent limitation from the use of content analysis in assessing the level of IR. No checklist to measure the level of IR can be fully exhaustive. Furthermore, we focus on whether an item in the checklist is disclosed, using a dichotomous scale, thus ignoring the quality of information disclosed.Practical implicationsThe study has several practical implications. From a managerial perspective, it shows that having more board meetings harms the level of IR. The results can guide regulators, such as the Australian Securities and Investment Commission (ASIC) and the Australian Securities Exchange (ASX), when drafting new regulations/guidelines/listing rules. If regulators aim for a higher level of integration in the reports, they know which “triggers to pull” to attain their target. Our results can guide regulators to choose the appropriate trigger among various alternatives. For instance, if a higher level of integrated reporting is desired, size instead of profitability should be chosen. Finally, ASX listed companies can use our checklist as a scorecard for their self-assessment.Originality/valueThis research is the first to investigate IR by devising a checklist based on IIRC (2013) along with an additional GPP component in the ASX context. Using separate models to examine each component of the aggregate IR index is also unique to this study. The study also brings to the fore the role of gender-diverse boards in promoting IR. It reiterates the debate about imposing a quota for better gender representation on boards.

Receptiveness of effective tax rate to firm characteristics: an empirical analysis on Indian listed firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajaya Kumar Panda ◽  
Swagatika Nanda
Keyword(s):  
Regression Model ◽  
Firm Size ◽  
Manufacturing Firms ◽  
Debt Ratio ◽  
Effective Tax Rate ◽  
Content Type ◽  
Tax Rate ◽  
Tax Shield ◽  
Dynamic Panel Regression ◽  
Debt Tax Shield

Purpose The purpose of this paper is to empirically investigate the factors deriving effective tax rate (ETR) for Indian manufacturing firms in different sectors. The study also tries to analyze the sensitiveness of ETR because of shocks on its key determinants. Design/methodology/approach The study is using Arellano–Bond dynamic panel regression model to identify the key drivers of ETR, and impulse response functions of panel vector auto-regression model to analyze the response of ETR because of one standard deviation (SD) shock to its key determinants. Findings This study concludes that ETR is significantly explained by firm size, profitability, growth rate and non-debt tax shield in most of the sectors, and debt ratio, asset tangibility and age of the firms are impacting ETR differently across sectors. In case of entire manufacturing sector, firm size, profitability, growth and non-debt tax shield are driving ETR positively and asset tangibility is driving ETR negatively. Interest coverage ratio (ICR) and firm age are not significant drivers of ETR. ETR is positively related with firm size, but responses negatively when there is an immediate shock to firm size. Similarly, ETR is negatively related with asset tangibility, but responds positively following an immediate shock to it. Overall, ETR is more sensitive and responses significantly because of shocks in firm size, profitability, growth, asset tangibility and non-debt tax shield whereas, the response is very marginal following shocks to debt ratio, ICR and age of the firm. Research limitations/implications Firm managers may find the study useful to understand the receptiveness of ETRs at each sector level. The empirical findings are not only validating the theoretical developments but also providing a root cause analysis to the firm managers to understand the cause and consequence of ETRs for firms at different sectors. Originality/value Empirically investigating the factors driving ETR and analyzing its sensitiveness because of one SD shock on its key determinants for Indian manufacturing firms from different sectors is the originality of this study. Developing a strong theoretical background and empirically validating it through advanced methodology makes the study unique.

The effect of corporate social responsibility on earnings management and tax avoidance in Chinese listed companies

2019 ◽  
Vol 27 (4) ◽  
pp. 632-652 ◽  
Author(s):  
Haijing Liu ◽  
Hyun-Ah Lee
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Tax Avoidance ◽  
Listed Companies ◽  
Private Enterprises ◽  
Content Type ◽  
Listed Firms ◽  
Chinese Listed Companies ◽  
Corporate Social

Purpose This paper aims to verify the effect of corporate social responsibility (CSR) on Chinese listed firms’ earnings management and tax avoidance. Specifically, this study investigates whether government-guided CSR implementation indeed drives firms to behave in a responsible manner by constraining earnings management and tax avoidance. Design/methodology/approach The paper analyses a sample of Chinese listed companies that are confronted with the unique situation of CSR being developed at a rapid pace by government-led policy and regulation. The study further investigates whether the effect of CSR on earnings management and tax avoidance is different for state-owned and private enterprises by partitioning the sample into these two subgroups. Findings The findings of this study show that government-guided CSR could be effective in reducing the firms’ earnings management and tax avoidance, even though the effect is limited to state-owned enterprises. Originality/value This paper provides new evidence on the relation of CSR with earnings management and tax avoidance in the Chinese context and sheds light on the importance of differentiating between the state-owned and private enterprises when studying the corporate behaviors of Chinese firms.

The gender difference in leadership effectiveness and its Sino-US comparison

2018 ◽  
Vol 12 (1) ◽  
pp. 106-124
Author(s):  
Shimei Yan ◽  
Yike Wu ◽  
Gang Zhang
Keyword(s):  
Gender Difference ◽  
Chief Executive Officers ◽  
Cultural Context ◽  
Leadership Effectiveness ◽  
Chief Executive ◽  
Listed Companies ◽  
Women's Leadership ◽  
Male And Female ◽  
Content Type ◽  
Chinese Listed Companies

Purpose There are mainly two viewpoints on women’s leadership effectiveness compared with that of men – the questioning view and the admiring view, two points of view that are not in agreement. Based on that, this study aims to find the gender difference in leadership effectiveness. Design/methodology/approach This study uses carefully matched male and female presidents (223 pairs) of Chinese listed companies and male and female chief executive officers (141 pairs) of American listed companies as samples. Analysis of variance was conducted to analyze the indicator data of the leadership effectiveness. Findings The findings show that women’s leadership effectiveness is not significantly inferior to that of men, and that women’s leadership effectiveness compared to that of men in the Chinese cultural context is not inferior to that in the American cultural context. The findings do not support the questioning view of women’s leadership effectiveness. Originality/value This study first uses the carefully matched (female/male leaders) data of Chinese listed companies and American listed companies as samples to find which viewpoint (the questioning view and the admiring view) is supported or is not supported.

scholarly journals DETERMINANT EFFICIENCY OF FINANCIAL INSTITUTIONS IN EMERGING MARKET

2019 ◽  
Vol 12 (2) ◽  
pp. 165
Author(s):  
Suwinto Johan
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Capital Structure ◽  
Financial Institutions ◽  
Firm Size ◽  
Financial Institution ◽  
Emerging Market ◽  
Financial Ratios ◽  
Financial Industry ◽  
Finance Company

<p>The aim of this research is to analyze the determinants of non-bank financial institution efficiency. The non-bank financial industry is one of the main contributors to Indonesia economic growth during the last 15 years. The non-bank financial industry will the consumer finance company industry. The panel data used in this research is from 2001-2016.The non-bank financial industry is also measured as one the fastest raising industries in the last 16 years. Thesixmain financial ratios and related industry alliance impact the determinants of finance companies’ efficiency. The financial ratios are firm size, capital structure, equity, asset ratio, income to total assets and cost to total assets. The empirical results show that the determinants of non-bank financial institution are income to total assets and cost to total assets. </p>

CSR and sustainability reporting practices in India: an in-depth content analysis of top-listed companies

2019 ◽  
Vol 15 (8) ◽  
pp. 1033-1053 ◽  
Author(s):  
Priyanka Aggarwal ◽  
Ajay Kumar Singh
Keyword(s):  
Content Analysis ◽  
Firm Size ◽  
Ownership Structure ◽  
Sustainability Reporting ◽  
Listed Companies ◽  
Annual Reports ◽  
Global Reporting Initiative ◽  
Content Type ◽  
Reporting Practices ◽  
Industry Type

Purpose The purpose of this paper is to comprehensively analyze the corporate social responsibility (CSR) and sustainability reporting (SR) practices of Indian companies in terms of disclosure quantity and quality, and to investigate the differences in SR practices by SR dimension, industry, ownership structure, firm size and profitability. Design/methodology/approach Data are collected from annual reports/business responsibility reports (BRR)/CSR/sustainability reports of 60 top-listed companies in India. A comprehensive sustainability reporting index is developed. Content analysis technique is used. Inter-coder reliability is established. Findings Altogether, 18 items of the index are not disclosed by the majority of companies in India. SR quality is found significantly lower than the SR quantity. Moreover, SR practices significantly differ by dimension/category, industry-type and firm-size but are not influenced by ownership structure. However, the study fails to establish any conclusive relationship between SR and profitability. Practical implications The present study has several implications for corporates, practitioners, policymakers and stakeholders. The findings underscore the need for amendments in the Global Reporting Initiative guidelines and BRR framework of the Securities and Exchange Board of India to avoid patchy disclosures and ensure complete reporting by companies. Originality/value This study is among the foremost studies in India evaluating SR practices of top-listed companies in the wake of the mandatory BRR requirement from a quantitative as well as qualitative perspective using a multidimensional index.

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