Linkage between performance and sustainability initiatives in banking sector–An empirical examination

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rajesh Kumar Bhaskaran ◽  
K.S. Sujit ◽  
Saksham Mongia
Keyword(s):  
Financial Performance ◽  
Banking Sector ◽  
Least Square ◽  
Empirical Examination ◽  
Content Type ◽  
Thomson Reuters ◽  
Social Initiatives ◽  
Sustainability Initiatives ◽  
The Impact ◽  
Global Banks

PurposeThis research study examines the impact of social and governance initiatives on financial performance of global banks. The study is significant in the context of massive changes in regulations, government policy, social attitudes and market development attributed to banking sector.Design/methodology/approachThe source of data for this study was ESG database of Thomson Reuters. The study was based on 472 global banks. The research paper uses two-stage least square model and the study covered the five-year period 2015–2019.FindingsBanks with high intensity of social and governance-related activities have positive market-based valuation effects. Adequately capitalized banks tend to invest more in social initiatives. Banks' governance initiatives directed toward the use of anti-takeover defensive mechanisms are skeptically perceived by markets. Riskier banks tend to have less investments in social initiatives.Research limitations/implicationsThe findings are relevant in the context of expectations from policymakers, consumers and investors with respect to the role which banks ought to play in funding the development of a sustainable economy. The research finding that strong governance and social initiatives by banks are value-enhancing measures is a clear evidence of the significance of ESG initiatives as value-creating mechanisms as perceived by markets.Originality/valueThis study addresses the gap in the research, which examines the role of governance and social initiatives on value creation in the banking sector firms. The study examines the impact of different elements of governance and social initiatives on financial performance of banks.

An empirical examination of firm financial performance along dimensions of supply chain resilience

2017 ◽  
Vol 40 (3) ◽  
pp. 254-269 ◽  
Author(s):  
Xun Li ◽  
Qun Wu ◽  
Clyde W. Holsapple ◽  
Thomas Goldsby
Keyword(s):  
Supply Chain ◽  
Financial Performance ◽  
Three Dimensions ◽  
Empirical Examination ◽  
Content Type ◽  
Supply Chain Resilience ◽  
Critical Dimensions ◽  
Firm Financial Performance ◽  
Supply Chain Agility ◽  
The Impact

Purpose This paper aims to investigate the impact of three critical dimensions of supply chain resilience, supply chain preparedness, supply chain alertness and supply chain agility, all aimed at increasing a firm’s financial outcomes. In a turbulent environment, firms require resilience in their supply chains to prepare for potential changes, detect changes and respond to actual changes, thus providing superior value. Design/methodology/approach Using survey data from 77 firms, this study develops scales for preparedness, alertness and agility. It then tests their hypothesized relationships with a firm’s financial performance. Findings The results reveal that the three dimensions of supply chain resilience (i.e. preparedness, alertness and agility) significantly impact a firm’s financial performance. It is also found that supply chain preparedness, as a proactive resilience capability, has a greater influence on a firm’s financial performance than the reactive capabilities including alertness and agility, suggesting that firms should pay more attention to proactive approaches for building supply chain resilience. Originality/value First, this study develops a comparatively comprehensive definition for supply chain resilience and explores its dimensionality. Second, this study provides empirically validated instruments for the dimensions of supply chain resilience. Third, this study is one of the first to provide empirical evidence for direct impact of supply chain resilience dimensions on a firm’s financial performance.

Education strategy misfit, board effectiveness and Indonesian Islamic bank performance

2020 ◽  
Vol 11 (3) ◽  
pp. 929-944
Author(s):  
Rahma Wijayanti ◽  
Vera Diyanty ◽  
Sugiyarti Fatma Laela
Keyword(s):  
Financial Performance ◽  
Negative Impact ◽  
Supervisory Board ◽  
Least Square ◽  
Bank Performance ◽  
Board Effectiveness ◽  
Content Type ◽  
Islamic Bank ◽  
Education Strategy ◽  
The Impact

Purpose This study aims to provide empirical evidence on the contingency factors that affect the implementation of education strategies and the impact of education strategy misfit on the performance and effectiveness of the board’s moderating role on the misfit level and performance of Islamic banks. Design/methodology/approach This research is a quantitative study with pooled ordinary least square panel data during the years 2007-2014 from all Indonesian Islamic commercial banks. Islamic bank performances are measured by the level of profitability and sharia financial performance. Board effectiveness is analysed by measuring the effectiveness of both the board of commissioners (BoC) and the sharia supervisory board (SSB). Findings This study proves that organisational competent qualities and chief executive officer tenure are the contingency factors that affect the implementation of the education strategy. This study’s results indicate that the effectiveness of both the BoC and SSB has a positive impact on the bank’s profitability and sharia financial performance. The results also show that misfit has a negative effect on sharia financial performance and that board effectiveness is proved to reduce the negative impact of a misfit on sharia financial performance. However, there is no strong evidence that board effectiveness reduces the negative impact of a misfit on profitability. Originality/value This study emphasises the importance of enhancing the competence and innovation of organisations in the implementation of education strategy and the need for synergy and increased capabilities among board members to achieve well-established Islamic bank performance.

Financial performance following discontinued operations

2020 ◽  
Vol 19 (4) ◽  
pp. 429-447
Author(s):  
Binod Guragai ◽  
Paul D. Hutchison
Keyword(s):  
Financial Performance ◽  
Performance Improvement ◽  
Least Square ◽  
Regulatory Change ◽  
Content Type ◽  
Future Performance ◽  
Regulatory Rule ◽  
Prior Literature ◽  
The Impact ◽  
Discontinued Operations

Purpose Prior literature provides empirical evidence that financial performance improves for core remaining operations after a firm discontinues some of their operations. This study aims to examine whether the association between discontinued operations and future financial performance improvement is affected by a regulatory rule (i.e. Statement of Financial Accounting Standards 144 [SFAS 144]) that significantly altered the reporting requirements of discontinued operations. This study also examines whether the association is dependent on the profitability of the operations discontinued. Design/methodology/approach Ordinary least square regressions are used to test the association between discontinued operations and financial performance improvement, conditional on the profitability of operations discontinued in the pre-SFAS 144 and SFAS 144 regulatory regimes. Data on profitability of operations discontinued is hand-collected. Findings Results suggest that firms experience improvement in financial performance following the reporting of discontinued operations in the pre-SFAS 144 era. Using hand-collected data on the profitability of operations discontinued, this research study also shows that improvement in performance is stronger for firms that discontinue loss operations compared to those that discontinue profitable operations. Originality/value This study explores the impact of regulatory change on the association between discontinued operations and future performance. Furthermore, unique hand-collected data is used to understand whether financial performance improvement is conditional on the profitability of the operations discontinued. Results documented in this paper should be of interest to investors, regulators and analysts in understanding the long-term strategic implications of discontinued operations.

Earnings management, financial performance and the moderating effect of corporate social responsibility: evidencefrom France

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Salma Chakroun ◽  
Anis Ben Amar ◽  
Anis Ben Amar
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Financial Performance ◽  
Moderating Effect ◽  
Least Square ◽  
Content Type ◽  
Academic Researchers ◽  
Corporate Social ◽  
The Impact

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.

Consequences of customer engagement and customer self-brand connection

2018 ◽  
Vol 32 (4) ◽  
pp. 387-399 ◽  
Author(s):  
Miguel Ángel Moliner ◽  
Diego Monferrer-Tirado ◽  
Marta Estrada-Guillén
Keyword(s):  
Financial Performance ◽  
Structural Equation ◽  
Banking Sector ◽  
Physical Contact ◽  
Customer Engagement ◽  
Equation Modeling ◽  
Content Type ◽  
New Information ◽  
Empirical Perspective ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of the customer engagement and customer self-brand connection on customer advocacy and firms’ financial performance. The research focuses on the financial sector and studies a complex organization with a uniform strategy, but which attends the public in different centers (bank branches). Design/methodology/approach A theoretical model of effects is tested using dyadic methodology, with 225 dyads (bank branch manager – average of five customers). The authors use structural equation modeling (EQS6.1) to test the relationships. Findings The results corroborate the hypotheses, with the exception of the influence of customer self-brand connection on financial performance. These analyses show that in the banking sector, where the intensive use of new information and technologies has led to a reduction in direct physical contact with the customer, the off-line experience continues to have a notable economic impact. Furthermore, investment in the brand from an experiential approach determines customer advocacy. Originality/value The contribution of this paper is twofold. This research analyzes from a theoretical and empirical perspective the impact of the customer engagement and customer self-brand connection on customer advocacy and firms’ financial performance.

scholarly journals Do sustainability practices influence financial performance? Evidence from the Nordic financial industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
ABM Fazle Rahi ◽  
Ruzlin Akter ◽  
Jeaneth Johansson
Keyword(s):  
Financial Performance ◽  
Positive Relationship ◽  
Good Governance ◽  
Generalized Method Of Moments ◽  
Negative Relationship ◽  
Financial Industry ◽  
Content Type ◽  
Thomson Reuters ◽  
Sustainability Practices ◽  
The Impact

Purpose The purpose of this study is to explore the impact of sustainability (environmental, social and governance or ESG) practices on the financial performance (FP) of the Nordic financial industry. Design/methodology/approach The study covers a sample selection of observations for a total of 152 firm-years for 39 financial companies within the Nordic region (Sweden, Denmark, Finland and Norway) for the business years including 2015–2019. Data regarding ESG and FP indicators were extracted from the Thomson Reuters Eikon database in July 2020. This is a quantitative study using regression and a generalized method of moments. Findings Using static and dynamic estimators, the authors found both positive and negative impacts of sustainability practice on FP. The authors identified a negative relationship between ESG practices and FP (return on invested capital, return on equity and earnings per share). The authors identified a positive relationship between governance and return on assets. Originality/value A key contribution to the accounting literature is the finding that there is a risk for financial firms in adopting sustainability practices, as they follow a logic that contradicts the purely economic rationale. On the other hand, the positive relationship between governance and FP helps not only companies but also regulators and researchers to understand the positive impact of a good governance structure.

The impact of financial performance on corporate social responsibility disclosure: the case of VN100 in Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thinh Quoc Tran
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Positive Impact ◽  
Least Square ◽  
Series Data ◽  
Content Type ◽  
Corporate Social Responsibility Disclosure ◽  
Corporate Social ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of financial performance (FP) on corporate social responsibility disclosure (CSRD) in the top 100 listed enterprises in Vietnam (VN100). Design/methodology/approach This paper uses the ordinary least square method to test and uses time series data of VN100 in five years from 2015 to 2019. Findings The results of this study show that the return on assets and return on equity have a positive impact on CSRD of VN100. Research limitations/implications This paper has not covered all independent variables related to FP. Practical implications The paper contribute to increasing CSRD of VN100. Social implications The paper contribute to raising awareness of businesses about community and society. Originality/value This paper contributes to increase the level of useful information for stakeholders to meet the trend of regional and international integration.

Country-level sustainability and cross-border banking flows

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sureyya Burcu Avci ◽  
Gözde Sungu-Esen
Keyword(s):  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Developed Countries ◽  
Least Square ◽  
Real Sector ◽  
Content Type ◽  
The Real ◽  
Cross Border ◽  
Country Level ◽  
The Impact

Purpose This paper aims to investigate the association between country-level sustainability scores and cross-border bank-to-non-bank flows within countries. Design/methodology/approach The authors analyze cross-border banking flows into the real sector firms of 26 developed countries from 2006 to 2017. The authors use a dynamic panel ordinary least square along with an instrumental variable and a generalized method of moments regressions to test the relationship between country-level sustainability scores and cross-border banking flows. Additionally, the authors apply Fama-MacBeth cross-sectional regression and non-parametric portfolio tests to obtain robust results. Findings The impact of country-level sustainability scores on cross-border banking flows is positive and significant. This finding is consistent with the signaling theory, which states that a country’s sustainability score is a signal to attract more international fund flows. Notably, the authors deduce that environmental sustainability is more important than the social and governance pillars. Practical implications The findings indicate that the real sector firms located in countries having higher sustainability scores can receive more international bank flows. Consequently, policymakers should focus more on country-level sustainability investments to improve the financing of resident firms. Social implications Policymakers should focus more on country-level sustainability investments to improve the financing of resident firms. Originality/value To the best of the authors’ knowledge, no existing study has investigated the signaling function of country-level sustainability scores in the cross-border banking flow conjecture. By investigating this relationship for real sector firms, this study portrays how the non-banking sector can benefit from such a policy that promotes sustainable practices at the country level.

Diversity and return: the impact of diversity of board members’ education on performance

2019 ◽  
Vol 19 (4) ◽  
pp. 824-842 ◽  
Author(s):  
Isaac Boadi ◽  
Daniel Osarfo
Keyword(s):  
Financial Performance ◽  
Banking Sector ◽  
Positive Impact ◽  
Sub Saharan Africa ◽  
Convergence Theory ◽  
Board Members ◽  
Content Type ◽  
Sub Saharan ◽  
Domestic Banks ◽  
The Impact

Purpose This paper aims to examine the impact of diversity of board members’ educational qualifications on the financial performance of banks in Ghana. Design/methodology/approach The present study applies system generalized methods of moments as an econometric model in carrying out the analysis. The study yielded a usable sample of 28 banks spanning from 2001 to 2016. Findings The paper concludes that the Ghanaian banking sector profit diverges and invalidates the convergence theory or “catch-up effect”. Specifically, educational qualifications of board members are relevant to banks’ financial performance. Across all the models used, board members with a first degree have a significant positive impact on performance. The opposite is the case for board members with Doctor of Philosophy (PhD). Research limitations/implications Unobservable characteristics such as entrepreneurial skills and intellectual competence experiences are excluded from the study because of the difficulties in measuring these variables. Notwithstanding, the exclusion of these characteristics does not invalidate the general outcome of the study. Originality/value The present study examines the impact of diversity of board members’ educational qualification on financial performance in the context of Sub-Saharan Africa, particularly Ghana. It also extends the existing literature by decomposing the banking sector into listed, non-listed, foreign and domestic banks.

Factors influencing the use of social media by SMEs and its performance outcomes

2015 ◽  
Vol 115 (3) ◽  
pp. 570-588 ◽  
Author(s):  
Sulaiman Ainin ◽  
Farzana Parveen ◽  
Sedigheh Moghavvemi ◽  
Noor Ismawati Jaafar ◽  
Nor Liyana Mohd Shuib
Keyword(s):  
Cost Effectiveness ◽  
Financial Performance ◽  
Positive Impact ◽  
Empirical Studies ◽  
Performance Outcomes ◽  
Partial Least Square ◽  
Least Square ◽  
Content Type ◽  
Facebook Usage ◽  
The Impact

Purpose – The purpose of this paper is to investigate the factors that influence Facebook usage among small and medium enterprises (SMEs). In addition, it examines the impact of Facebook usage on financial and non-financial performance of the SMEs. Design/methodology/approach – Using integrated model, this study examined the influence of compatibility, cost effectiveness, interactivity and trust on Facebook usage and its subsequent impact on organizations performance. Statistical analyses were based on the data collected, through survey questionnaire from 259 SMEs in Malaysia. Partial Least Square (PLS) method was used to test the hypotheses. Findings – The study revealed that Facebook usage has a strong positive impact on financial performance of SMEs; similarly it was also found that Facebook usage positively impacts the non-financial performance of SMEs in terms of cost reduction on marketing and customer service, improved customer relations and improved information accessibility. Additionally, factors such as compatibility, cost effectiveness and interactivity was identified as factors that influence Facebook usage among SMEs. Research limitations/implications – This study is limited in selection of samples. The sample only covered one community of SME in Malaysia which limits generalizability of the findings. This study provided a clearer idea on the real importance of Facebook and its benefits. The results would motivate and guide organizations in the adoption of Facebook for business activities. The study also has various theoretical and practical contributions. Originality/value – Very few empirical studies investigated the actual impact of Facebook usage among organizations. This study investigated the effect of Facebook usage on the financial performance of the organizations which is really important to study as it reveals the exact value of using Facebook for business activities.

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