Marketing intensity and persistence of firm performance: empirical evidence from Indonesia

2019 ◽  
Vol 69 (6) ◽  
pp. 1109-1127
Author(s):  
Dinesh Jaisinghani ◽  
Harwinder Kaur ◽  
Jatin Goyal ◽  
Mahesh Joshi
Keyword(s):  
Firm Performance ◽  
Profit Maximization ◽  
Optimal Level ◽  
Content Type ◽  
Listed Firms ◽  
Exit Barriers ◽  
Long Run ◽  
Dynamic Panel Regression ◽  
Marketing Intensity ◽  
The Impact

Purpose The purpose of this paper is to examine the degree of persistence of firm performance for publicly listed firms in Indonesia. The study also explores the impact of marketing expenditure on firm’s performance. Design/methodology/approach The data comprise 165 listed firms operating in Indonesia over the period 2007–2016. Dynamic panel regression estimations using Arellano and Bond (1991) and Blundell and Bond (1998) techniques have been deployed to generate the results. Findings The findings show the existence of positive persistence and sub-optimal level of competition in the performance of Indonesian firms. The results highlight that marketing intensity has a positive and significant impact on firm performance. The positive persistence hints at creation of substantial entry and exit barriers by the Indonesian firms and also indicate that Indonesian firms are able to create behavioral inertia among their consumers by properly directing their marketing efforts. Practical implications There is a need on the part of management to strengthen the short-term profit capabilities to nurture long-term benefits of profit maximization. On the regulators part, the authorities should frame the policies to foster long-run competition. Originality/value The current study contributes to the sparse literature on persistence of firm performance in the context of emerging economies like Indonesia. This is the first study on persistence of firm performance for publicly listed firms in Indonesia.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Corporate risk taking and sustainability: a case of listed firms from USA and Germany

2019 ◽  
Vol 10 (1) ◽  
pp. 2-15 ◽  
Author(s):  
Zahid Irhsad Younas ◽  
Ameena Zafar
Keyword(s):  
Risk Taking ◽  
Profit Maximization ◽  
Well Being ◽  
Least Square ◽  
Board Structure ◽  
Best Interest ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Risk ◽  
The Impact

PurposeThis study aims to analyze the impact of corporate risk taking on the sustainability of firms in USA and Germany. As risk taking is an expensive phenomenon, the firm may shift the resources from stakeholder well-being to profit maximization of shareholders. Ultimately, risk taking results in the reduction of firm’s sustainability.Design/methodology/approachTo capture the impact of corporate risk taking, the corporate-governance variables, i.e. “independent board structure” and “board size,” were used as instrumental variables to control excessive corporate risk taking and restrict it at a healthy level. A sample of 3,387 unbalanced panel observations from USA and Germany, for the period 2004-2015, were assessed.FindingsThe results confirm that corporate risk taking has a negative and significant impact on the sustainability of firms.Research limitations/implicationsGovernment and policymakers in USA and Germany may introduce regulations to curb excessive corporate risk taking for sustainable corporations and sustainable society. This research suggests that corporate risk taking is not in the best interest of stakeholders.Originality/valuePrevious literature only finds the impact of sustainability on corporate risk taking and there is not a single study that examines the impact of corporate risk taking on the sustainability of a firm. Thus, this study contributes to existing literature on corporate risk taking and sustainability. The study further contributes by using the instrumental variable two stage least square.

An empirical investigation on the impact of capital structure on firm performance: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Ayaz ◽  
Shafie Mohamed Zabri ◽  
Kamilah Ahmad
Keyword(s):  
Firm Performance ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Optimal Level ◽  
Agency Cost ◽  
Superior Performance ◽  
Initial Attempt ◽  
Content Type ◽  
Leverage Ratio ◽  
The Impact

PurposeThe purpose of this study is to examine the relationships between leverage and firm’s performance in Malaysia by framing the relationship under the tradeoff theory and agency cost theory.Design/methodology/approachBased on insights drawn from the existing literature, we opted for fixed effects and system two-steps GMM models to establish the hypothesized relationship between leverage and performance. We analyzed 528 nonfinancial firms listed on the Bursa Malaysia Stock exchange for the period of 12 years (2005–2016).FindingsThe outcomes show that the leverage ratio improves the firm performance, consistent with leverage serving as an effective strategy in constraining managers from building their personal empire, revealing a proportionately greater benefit for Malaysian firms than the cost to debt financing. The authors also find that a positive relationship between leverage and firm performance switch to the negative when the level of leverage reaches beyond the optimal level. Consequently, switching from positive to negative indicates that debt has a twofold (nonlinear) impact on firm performance.Practical implicationsOur research provides several implications to potential stakeholders. For investors, firms having lower leverage ratios could achieve superior performance, thus investing in corporations pursuing higher performance. Managers should therefore strive for achieving higher performance to meet the needs of investors and shareholders. From the researcher’s perspective, our research suggests the need to go away from the searching linear association between leverage and firm performance and the relevance of nonlinear correlation. Moreover, our research can help managers to understand how their lender relates to their debt to assets ratios. Thus, they can design an optimal level of leverage that not only improves the firm’s performance but also reduce the associated costs.Originality/valueTo the best of the author’s knowledge, this is the initial attempt in the context of Malaysia that documents evidence indicating that the lower leverage is likely to create value for shareholders while a higher debt ratio reduces firm profitability.

Dynamic study of corporate governance structure and firm performance in China

2019 ◽  
Vol 13 (2) ◽  
pp. 299-317 ◽  
Author(s):  
Lin Shao
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Generalized Method Of Moments ◽  
Supervisory Board ◽  
Governance Structure ◽  
State Ownership ◽  
Content Type ◽  
Listed Firms ◽  
The Impact ◽  
The Relationship

Purpose The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to 2015. The authors’ motivation derives from the fact that the CG system in China is different from those in the US, the UK, Germany, Japan and other countries. Design/methodology/approach A large unbalanced sample, covering more than 22,700 observations in Chinese listed firms, was used to explore, by means of a system-generalized method-of-moments (GMM) estimator, the relationship between CG structure and firm performance to remove potential sources of endogeneity. Findings Results show that Chinese CG structure is endogenously determined by the CG mechanisms investigated: there is no relationship between board size (including independent directors) and firm performance; CEO duality has a significantly negative effect on firm performance; concentration of ownership has a significantly positive influence on firm performance; managerial ownership is negatively correlated with firm performance; state ownership has a significantly positive effect on firm performance; and a supervisory board is positively correlated with firm performance. Practical implications The findings provide policymakers and firm managers with useful empirical guidance concerning CG in China. Originality/value Few integrative studies have examined the impact of CG structure on firm performance in China. This study adds new empirical evidence that the relation between CG structure and performance in China is endogenous and dynamic when controlling for unobserved heterogeneity, simultaneity, and dynamic endogeneity.

Enhancing staff motivation in “tough” periods: implications for business leaders

2014 ◽  
Vol 30 (6) ◽  
pp. 35-36
Author(s):  
Antonios Panagiotakopoulos
Keyword(s):  
Firm Performance ◽  
Organizational Performance ◽  
Employee Performance ◽  
Chief Executive ◽  
Business Leaders ◽  
Individual Development ◽  
Content Type ◽  
Long Run ◽  
Long Term Impact ◽  
The Impact

Purpose – The purpose of the paper is to present a viewpoint based on an empirical study conducted by the author, which explored the motivational techniques used by 30 chief executive officers in the context of an advancing economy like Greece that faces a severe financial crisis and evaluated the impact of such motivational tools on staff performance. Design/methodology/approach – The viewpoint is based on a quantitative survey of 30 Greek large organizations involving the leaders of the firms and 113 workers. In all, 143 responses were collected concerning the main motivational techniques used by the participant leaders and their impact on employee behavior. Findings – Overall, the findings showed that in the short-term, both motivational models (i.e. “inspirational” versus “fear”) may lead to effective organizational performance. However, the main difference appears to be related to the long-term impact of each model on firm performance. In particular, the findings indicated that “fear motivation” is more likely to lead to poor firm performance in the long-run compared to “inspirational motivation” due to increased staff absenteeism and turnover. Practical implications – The core implication of the study is that “fear motivation” should be reconsidered by business leaders, as the particular motivational approach adopted has been based on a limited understanding around its overall impact on employee performance. As the analysis revealed, a motivational model focused around empowerment, trust and individual development may lead to better organizational results. Originality/value – It informs the existing management literature about the impact of different motivational patterns on employee performance, where our knowledge is limited.

Impact of R&D on profitability in the pharma sector: an empirical study from India

2016 ◽  
Vol 10 (2) ◽  
pp. 194-210 ◽  
Author(s):  
Dinesh Jaisinghani
Keyword(s):  
Pharmaceutical Industry ◽  
Dynamic Panel Data ◽  
Content Type ◽  
Listed Firms ◽  
Dynamic Relationship ◽  
Long Run ◽  
Generalized Methods Of Moments ◽  
And Performance ◽  
The Impact ◽  
Indian Pharmaceutical Industry

Purpose The purpose of the current paper is to examine the nature of profit persistence and to estimate the dynamic relationship between research and development (R&D) intensity and firm profitability in the Indian pharmaceutical industry. Design/methodology/approach A dynamic panel data model with generalized methods of moments (GMMs) technique has been deployed to estimate the relationship between R&D intensity and performance. Arellano and Bond (1991) estimation methodology has been used to generate the estimates. A sample of 55 publicly listed firms operating in the Indian pharmaceutical industry for the period 2005-2014 has been considered. Findings The study finds moderate to heavy profit persistence in the Indian pharmaceutical industry. The study also finds that there exists a positive relationship between R&D intensity and performance for the Indian pharmaceutical Industry. The results hold even after considering two separate measures of profitability – return on assets and return on sales. The results also hint at a possible non-linear relationship between R&D intensity and profitability. Research limitations/implications The results highlight positive profit persistence among pharmaceutical firms. The results also highlight the need for a sustained investment in R&D, as its benefits are driven in the long run. Thus, managers should devise proper policies R&D investments. Also, prospective entrants should properly study the existing entry barriers before deciding upon the mode and timing of entry. Originality/value The degree of profit persistence and the dynamic nature of relationship between R&D intensity and firm performance in the Indian pharmaceutical sector has not been studied. Thus, this paper fills this gap and also highlights the impact of certain firm- and industry-specific variables on profitability.

Impact of disputed tax litigation risk on firm performance: evidence from India

2018 ◽  
Vol 31 (3) ◽  
pp. 458-478 ◽  
Author(s):  
Saumya Ranjan Dash ◽  
Mehul Raithatha
Keyword(s):  
Firm Performance ◽  
Stock Return ◽  
Emerging Market ◽  
Litigation Risk ◽  
Cross Sectional ◽  
Content Type ◽  
Listed Firms ◽  
Return Behavior ◽  
Contingent Liability ◽  
The Impact

PurposeThe purpose of this study is to investigate the impact of disputed tax litigation risk on firm performance and stock return behavior using a sample of Indian listed firms.Design/methodology/approachThe authors use disputed tax liability, reported as a contingent liability by the listed firms, as a proxy for the disputed tax litigation risk. To examine the impact of disputed tax litigation risk on firm performance (measured by accounting and market-based measures), the empirical approach used in this study focusses on the panel estimation technique. A portfolio-based approach using alternative asset pricing models examines the cross-sectional return variation because of the influence of disputed tax litigation risk.FindingsThe results of this study show a negative relationship between firm performance measures and disputed tax litigation risk. Cross-sectional test results reveal that higher disputed tax litigation risk is associated with higher expected returns.Research limitations/implicationsThis study focusses on disputed tax reported under the heading of contingent liability as a proxy for litigation risk. The study will help investors and portfolio managers to consider disputed tax litigation risk as an important parameter in the evaluation of firm performance. This study will also help regulators to get feedback on tax related policies and improve the dispute resolution process.Originality/valueThis study adds to the existing literature on the relationship between litigation risk and firm performance. In the context of emerging market, this study is the first-of-its-kind study, which focusses on disputed tax as a litigation risk proxy and examines its possible impact on firm performance and stock return behavior.

CSR disclosures and profit persistence: evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dinesh Jaisinghani ◽  
Amritjot Kaur Sekhon
Keyword(s):  
Negative Relationship ◽  
Content Type ◽  
Listed Firms ◽  
Total Community ◽  
Dynamic Panel Regression ◽  
Different Dimensions ◽  
Csr Disclosure ◽  
Corporate Social ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of the present study is to analyze the impact of corporate social responsibility (CSR) disclosures on firms' profitability and its persistence.Design/methodology/approachThe study has been conducted for listed firms operating in India from 2008 to 2017. Content analysis has been utilized to estimate the CSR disclosures score. Further, dynamic panel regression has been utilized to estimate the relationship between CSR disclosures and profit persistence.FindingsThe results confirm positive profit persistence for Indian companies. The results further show that different dimensions of CSR disclosure have differential impact on firms' profitability. CSR dimensions concerning total community development and product-related disclosures have a positive relationship, whereas dimensions related to environmental and customer-related disclosures have a negative relationship with financial performance. The results also indicate that CSR disclosures are significantly related to profit persistence.Originality/valueThe study is first of its kind that analyzes the impact of CSR disclosure on profit persistence for Indian companies. The results can provide useful implications for managers and regulators in terms of formulation of overall CSR policies.

The impact of ambidexterity on supply chain flexibility fit

2016 ◽  
Vol 21 (4) ◽  
pp. 433-452 ◽  
Author(s):  
Araceli Rojo ◽  
Javier Llorens-Montes ◽  
Maria Nieves Perez-Arostegui
Keyword(s):  
Supply Chain ◽  
Firm Performance ◽  
Measurement Instrument ◽  
Optimal Level ◽  
Structural Equations ◽  
Chain Flexibility ◽  
Content Type ◽  
Supply Chain Flexibility ◽  
New Instrument ◽  
The Impact

Purpose The purpose of this paper is to analyze whether supply chain (SC) ambidexterity improves supply chain flexibility (SCF) and its impact on SC competence and firm performance. A new measurement instrument for SCF is proposed that takes into account the demands of the environment: SCF fit. Design/methodology/approach A theoretical model is developed to examine the relationships proposed. The hypotheses are tested with data from 302 manufacturing firms using a structural equations model methodology. Findings The results show that SC ambidexterity helps to achieve the optimal level of SCF and that supply chain management (SCM) is important to firm performance. Research limitations/implications This paper makes three contributions to the SCM literature: first, it develops the conceptual definition of SC ambidexterity and studies its effects at the SC level; second, it develops a new instrument to measure SCF known as SCF fit; third, it studies both the impact of SCF fit on SC competence and the importance of SC in firm performance. Practical implications This paper develops a measurement instrument that permits managers to diagnose the level of SCF and the correspondence/gap between current and optimal levels and to establish comparisons between different SC. It also indicates the importance of SCM for firm performance and the need to consider the SC as a whole. Originality/value This is one of the first studies to analyze ambidexterity in an organizational network like the SC. It shows that exploitation practices do not jeopardize SCF as long as they are accompanied by exploration practices. That is, high levels of exploration and exploitation are compatible in the SC and lead to the optimal level of SCF.

scholarly journals Struktur Modal dan Kinerja Perusahaan (Studi pada perusahaan yang terdaftar di Bursa Efek Indonesia periode 2011 s/d 2012)

2014 ◽  
Vol 5 (1) ◽  
Author(s):  
Novi S Budiarso
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Optimal Level ◽  
Stock Exchanges ◽  
Listed Firms ◽  
Total Debt ◽  
The Impact

Abstract This paper examine the impact of capital structure on firm performance, in Indonesian Stock Exchange. Firm performance are analyzed from the side of accounting indicators, in this research use liquidity. Because the optimal level of debt of the firm is limited by the liquidity of the assets and it depends on the average usage of the debt in the particular industry. In the other side liquidity  is  conventionally  seen  as  reflecting  investors’  degree  of  risk -aversion, The study collects  of listed firms in Indonesian Stock Exchanges during 2011 to 2012. The listed firms on sub sector trade, services and investment. Multiple Regression analysis approach was employed in carrying out this analysis. Specifically, determined the simultaneous relationships among the various variables. The results show that as partial total debt to asset significantly influences to company’s performance but long term debt to asset not significantly influences to company’s performance. Simultaneously, total debt to asset and  long term debt to asset influences company’s performance. This evidence is consistent with models of optimal capital structure and with the hypothesis that debt level changes release information about changes in firm value/performance.

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