Does location matter in determining firms’ performance? A comparative analysis of domestic and multinational companies

2018 ◽  
Vol 12 (3) ◽  
pp. 253-272 ◽  
Author(s):  
Said Shah ◽  
Jamil Anwar ◽  
SAF Hasnu
Keyword(s):  
Multinational Firms ◽  
Stock Exchange ◽  
National Level ◽  
Secondary Data ◽  
Bench Mark ◽  
Corporate Planning ◽  
Content Type ◽  
Corporate Strategies ◽  
Cash Conversion Cycle ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of internationalization of investment on corporate policies through multinational firms (MNFs) and thereby variation in financial performances when compared to domestic firms (DFs) using 10 years’ (2004-2013) secondary data of 153 firms listed on Pakistan Stock Exchange. Design/methodology/approach This study applies regression and ratio analyses for testing of hypotheses and other statistics. Findings The results indicate that the performance of MNFs is better than that of DFs primarily because of internationalization of investments and inventory utilization. The rest of the factors included in the model, namely, cash conversion cycle and corporate governance (CG) indices, have less prominent role in determining firms’ performance. Research limitations/implications Sample size was restricted to 153 firms, as complete data for the period selected to carry out the study were available only for these firms. For determining the quality of CG, only sample average has been used as bench mark due to non-availability of industrial average. Practical implications The recommendations of the research can be used by economic planners and corporate experts as policy guidelines and bench mark for improving the corporate and economic performance of the country. Besides, these recommendations are beneficial for emerging economies particularly and developed economies generally across the globe. Social implications Economic and financial regulators can get guidance from the findings of the study to adjust national-level corporate planning. For example, State Bank of Pakistan (the central bank of the country) can amend its prudential regulations with regard to maintaining liquidity by corporate units according to the results of the study. Corporate units can directly get guidance and adopt the findings of the study in their corporate planning to improve their performance. The findings and methodology of the research can also be used by research students on further exploring the field. Originality/value Splitting the sample into domestic and multinationals firms, separately and jointly analyzing these firms and then comparing corporate strategies of these firms based on location are unique.

scholarly journals Working Capital Management (WCM) and Firm Performance in Emerging Markets: A Case of Bangladesh

2021 ◽  
Vol 10 (1) ◽  
pp. 36
Author(s):  
Rafiqul Bhuyan ◽  
Mohammad Sogir Hossain Khandoker ◽  
Noshin Tasneem ◽  
Mahjuja Taznin
Keyword(s):  
Stock Exchange ◽  
Secondary Data ◽  
Total Asset ◽  
Capital Management ◽  
Working Capital ◽  
Return On Assets ◽  
Working Capital Management ◽  
Cash Conversion Cycle ◽  
Current Asset ◽  
The Impact

We examine the impact of efficient working capital management on market value and profitability. Using secondary data on selected firms from Dhaka Stock Exchange we explore the effects of various working capital components (i.e. cash conversion cycle (CCC), current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR), debt to asset ratio (DTAR), siz,e and growth) to the firm’s performance by looking firm’s value i.e. Tobin’s Q (TQ) and profitability i.e. return on asset (ROA) and return on invested capital (ROIC). Our results show that, for both food and overall manufacturing sectors, there is a significant association between working capital variables and firm’s value & return on assets, but an insignificant association with return on invested capital.

Impact of R&D activities on the financial performance: empirical evidence from Indian pharmaceutical companies

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mithun Nandy
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Secondary Data ◽  
Pharmaceutical Companies ◽  
Financial Returns ◽  
Data Set ◽  
Content Type ◽  
Return On Equity ◽  
Performance Framework ◽  
The Impact

Purpose This paper aims to study the impact of research and development (R&D) activities on the financial performance of Indian pharmaceutical companies listed with the national stock exchange (NSE) of India by conceptualizing R&D’s impact and financial performance framework (RDiFPF). Design/methodology/approach Strongly balanced panel data set was used for the period of 1999–2020 on the basis of secondary data subscribed from a reputable Capitalline, a corporate database as well as individual company-wise annual report extract for cross-validation. Findings The paper presents a novel conceptualized framework called RDiFPF with the help of financial performance related variables: sales turnover, return on assets, return on equity and market capitalization, where R&D impacts in a significant manner on the financial performance of the NSE-listed Indian pharmaceutical companies. The paper finally establishes a link between R&D activities and financial performance with respect to the Indian pharmaceutical companies listed with the NSE. Research limitations/implications The suggested framework opens new dimension of research with respect to R&D, innovative practices in the pharmaceutical business and financial performance. The research can also be used in teaching and may be beneficial for framing public policy. Though the study has been carried out in Indian context, it might have implications in the emerging economies. Practical implications To achieve financial returns, pharmaceutical companies need to adopt appropriate endeavour to invest substantial amount on R&D to bring innovation in the pharmaceutical business. Social implications A better allocation of R&D expenditure has the potential for bringing new medicine, which can cure unknown diseases and impact on the lives of the patient fraternities. Originality/value The contributions of the paper are twofold: on the one hand, the author proposes a framework where emphasis has been provided on the R&D investment in the pharmaceutical business and, on the other hand, significant financial performance has been shown which motivates every R&D-centric pharmaceutical companies. Notably, the novel RDiFPF framework, which has been proposed in this study, may ignite and inspire the pharmaceutical business leaders as well as entrepreneurs to take R&D and innovation in pharmaceutical business for impacting human lives as well as to enjoy significant financial returns by providing health-care solution for treating novel diseases and disorders.

Factors affecting dividend policy in manufacturing companies in Indonesia Stock Exchange

2019 ◽  
Vol 39 (1) ◽  
pp. 4-17
Author(s):  
Eko Wahjudi
Keyword(s):  
Dividend Policy ◽  
Stock Exchange ◽  
Emerging Market ◽  
Secondary Data ◽  
Manufacturing Companies ◽  
Content Type ◽  
Factors Affecting ◽  
Independent Variable ◽  
Net Assets ◽  
The Impact

Purpose The purpose of this paper is to analyze the variables that significantly affect dividend policy. Design/methodology/approach This research uses a type of comparative causal research (causal-comparative research), where the fact or event is identified as an influenced variable (dependent variable) and the variables that influence (independent variable) are investigated. In this study, the authors want to examine the effect of collateralizable assets, growth in net assets, liquidity, leverage and profitability of dividend policy by using quantitative approach. The data used are secondary data obtained from Indonesia Stock Exchange website with website address: www.idx.co.id. Findings The results showed that collateralizable assets have a negative, but not significant, effect on dividend policy. This shows that the high collateralizable assets do not affect the policy of the dividend of manufacturing companies. The second variable, growth in net assets, has a negative and significant effect on dividend policy. This shows that the higher growth in net assets will lower the dividend policy of manufacturing companies. Furthermore, the results show that liquidity has a negative and significant effect on dividend policy. This indicates that higher liquidity will lower the dividend policy of manufacturing companies. Furthermore, result that leverage has a negative and significant effect on dividend policy is obtained. This suggests that the higher leverage will lower the dividend policy of the manufacturing company. And lastly, profitability has a negative, but not significant, effect on dividend policy. This shows that high profitability does not affect dividend policy of manufacturing companies. Originality/value The authors contribute to prior research by providing the empirical evidence on the impact of collateralizable assets, growth in net assets, liquidity, leverage and profitability on dividend policy in Indonesia market as an emerging market.

scholarly journals PENGARUH MANAJEMEN MODAL KERJA TERHADAP KINERJA PERUSAHAAN : STUDI PADA PERUSAHAAN-PERUSAHAAN MANUFAKTUR YANG TELAH GO PUBLIK DI BURSA EFEK INDONESIA

2021 ◽  
pp. 156-168
Author(s):  
Donalson Silalahi ◽  
Esli Silalahi
Keyword(s):  
Regression Coefficient ◽  
Stock Exchange ◽  
Secondary Data ◽  
Sampling Technique ◽  
Company Performance ◽  
Manufacturing Companies ◽  
Cash Conversion Cycle ◽  
Conversion Period ◽  
Independent Variable ◽  
The Impact

The purpose of this study is to obtain the empirical evidence about the impact of: (a) the average conversion period on company performance. (b) the inventory conversion period on company performance. (c) the average payment period on company performance and (d) the cash conversion cycle on company performance on the Indonesia Stock Exchange. To achieve this goal, research was carried out on manufacturing companies listed on the Indonesia Stock Exchange and the sample size is 48 companies. Thus, the sampling technique in this study used a purposive sampling. The data used in this study is secondary data. All data is obtained from the Indonesia Stock Exchange website. Furthermore, the regression coefficient of each independent variable was tested using the t test and the F test with α 10 percent. Referring to the results of research, the following conclusions can be made: First, the average conversion period has a positive and significant effect on company performance. The ability of the average conversion period in explaining the company's performance is 13.4 percent. Second, the inventory conversion period has a positive and significant effect on company performance. The ability of the inventory conversion period to explain the company's performance by 19.4 percent. Third, the average payment period has a positive and insignificant effect on company performance. The ability of average payment period in explaining the company's performance is 0.9 percent. Fourth, the cash conversion cycle has a positive and significant effect on company performance. The ability of the cash conversion cycle to explain the company's performance by 14.7 percent. Fifth, the cash conversion cycle and the quadratic cash conversion cycle can explain the variation in company performance by 23 percent. Sixth, there is no optimal working capital in the companies under study.

Social capital and national innovation system: a cross-country analysis

2014 ◽  
Vol 21 (4) ◽  
pp. 453-475 ◽  
Author(s):  
Sepehr Ghazinoory ◽  
Ali Bitaab ◽  
Ardeshir Lohrasbi
Keyword(s):  
Social Capital ◽  
National Level ◽  
Innovation System ◽  
Negative Effects ◽  
Content Type ◽  
Research Findings ◽  
Different Dimensions ◽  
The Impact ◽  
Positive Effect

Purpose – In the last two decades, researchers have paid much attention to the role of cultural values on economic and social development. In particular, the crucial role of different aspects of culture on the development of innovation has been stressed in the literature. Consequently, it is vital to understand how social capital, as a core cultural value, affects the innovation process and the innovative performance at the national level. However, to date, the impact of different dimensions of social capital and innovation has not been properly portrayed or explained. Thus, the purpose of this paper is to investigate the influence of four different dimensions of social capital (institutional and interpersonal, associational life and norms) on two of the main functions of national innovation system (NIS) (entrepreneurship and knowledge creation) based on over 50,000 observations in 34 countries. Design/methodology/approach – In this regard, national-level data from the World Values Survey database was employed to quantify social capital. Entrepreneurship is, in turn, assumed to consist of three sub-indexes and 14 indicators based on the Global Entrepreneurship Index. Knowledge creation is also measured through US Patent Office applications. Also, exploratory factor analysis and structural equation modeling approach were used to build the measurement model and investigate the impact that each factor of social capital had on entrepreneurship and knowledge application, respectively. Measurement and structural models were built and their reliability and validity were tested using various fit indices. Research findings suggest the strong positive effect of institutional trust and networking on entrepreneurship. Also, interpersonal trust and networks were shown to have high influence on knowledge development at the national level. Norms appear to have naïve to medium negative effects on both functions. Findings – Research findings suggest the strong positive effect of institutional trust and networking on entrepreneurship. Also, interpersonal trust and networks were shown to have high influence on knowledge development at the national level. Norms appear to have naïve to medium negative effects on both functions. Originality/value – However, to date, the impact of different dimensions of social capital and innovation has not been properly portrayed or explained.

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.

The performance of the Broad Based Black Economic Empowerment compliant listed property firms in South Africa

2016 ◽  
Vol 34 (1) ◽  
pp. 3-26 ◽  
Author(s):  
Omokolade Akinsomi ◽  
Katlego Kola ◽  
Thembelihle Ndlovu ◽  
Millicent Motloung
Keyword(s):  
Stock Returns ◽  
Factor Model ◽  
Stock Exchange ◽  
Sharpe Ratio ◽  
Economic Empowerment ◽  
Content Type ◽  
Black Economic ◽  
Black Economic Empowerment ◽  
The Government ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of Broad-Based Black Economic Empowerment (BBBEE) on the risk and returns of listed and delisted property firms on the Johannesburg Stock Exchange (JSE). The study was investigated to understand the impact of Black Economic Empowerment (BEE) property sector charter and effect of government intervention on property listed markets. Design/methodology/approach – The study examines the performance trends of the listed and delisted property firms on the JSE from January 2006 to January 2012. The data were obtained from McGregor BFA database to compute the risk and return measures of the listed and delisted property firms. The study employs a capital asset pricing model (CAPM) to derive the alpha (outperformance) and beta (risk) to examine the trend amongst the BEE and non-BEE firms, Sharpe ratio was also employed as a measurement of performance. A comparative study is employed to analyse the risks and returns between listed property firms that are BEE compliant and BEE non-compliant. Findings – Results show that there exists differences in returns and risk between BEE-compliant firms and non-BEE-compliant firms. The study shows that BEE-compliant firms have higher returns than non-BEE firms and are less risky than non-BEE firms. By establishing this relationship, this possibly affects the investor’s decision to invest in BEE firms rather than non-BBBEE firms. This study can also assist the government in strategically adjusting the policy. Research limitations/implications – This study employs a CAPM which is a single-factor model. Further study could employ a multi-factor model. Practical implications – The results of this investigation, with the effects of BEE on returns, using annualized returns, the Sharpe ratio and alpha (outperformance), results show that BEE firms perform better than non-BEE firms. These results pose several implications for investors particularly when structuring their portfolios, further study would need to examine the role of BEE on stock returns in line with other factors that affect stock returns. The results in this study have several implications for government agencies, there may be the need to monitor the effect of the BEE policies on firm returns and re-calibrate policies accordingly. Originality/value – This study investigates the performance of listed property firms on the JSE which are BEE compliant. This is the first study to investigate listed property firms which are BEE compliant.

Epidemics and Chinese firms' stock returns: is COVID-19 different?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Quang Thi Thieu Nguyen ◽  
Dao Le Trang Anh ◽  
Christopher Gan
Keyword(s):  
Stock Returns ◽  
Negative Impact ◽  
Stock Exchange ◽  
Market Performance ◽  
Disease Outbreaks ◽  
Stock Exchanges ◽  
Content Type ◽  
Event Study Method ◽  
Economic Shock ◽  
The Impact

PurposeThis study investigates the Chinese stocks' returns during different epidemic periods to assess their effects on firms' market performance.Design/methodology/approachThe study employs an event study method on more than 3,000 firms listed on Shanghai and Shenzhen stock exchanges during periods of SARS, H5N1, H7N9 and COVID-19FindingsEpidemics' effect on firms' stock returns is persistent up to 10 days after the event dates. Although the impact varies with types and development of the disease, most firms experience a negative impact of the epidemics. Among the epidemics, COVID-19 has the greatest impact, especially when it grows into a pandemic. The epidemics' impact is uneven across industries. In addition, B-shares and stocks listed on Shanghai Stock Exchange are more negatively influenced by the epidemic than A-shares and those listed on Shenzhen Stock Exchange.Research limitations/implicationsThe results of the study contribute to the limited literature on the effects of disease outbreaks as an economic shock on firm market performance. Given the possibility of other epidemics in the future, the study provides guidance for investors in designing an appropriate investing strategy to cope with the epidemic shocks to the market.Originality/valueThe research is novel in the way it compares and assesses the economic impact of different epidemics on firms and considers their impact at different development stages.

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.

The relationship between narcissism, managerial overconfidence and comparability of financial statements of listed companies

2021 ◽  
Vol 19 (5) ◽  
pp. 681-700
Author(s):  
Mohammad Almaleki ◽  
Mahdi Salehi ◽  
Mahdi Moradi
Keyword(s):  
Stock Exchange ◽  
Chief Executive ◽  
Financial Statements ◽  
Business Environment ◽  
Multiple Regression Model ◽  
Content Type ◽  
Institutional Settings ◽  
Managerial Overconfidence ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the impact of managerial narcissism and overconfidence on financial statements’ comparability. In other words, this paper seeks to answer the question of whether the personality characteristics of managers may affect the level of financial statements’ quality of commercial entities or not. Design/methodology/approach The research hypotheses are tested using a sample of 896 observations taken from the Tehran Stock Exchange and 245 observations from the Iraqi Stock Exchange during 2012 and 2018 using the multiple regression model based on the combined data technique. Findings The findings show that managerial narcissism is positively and significantly associated with Iran’s financial statement comparability. In contrast, Iraqi data articulate a negative association between these two variables. This paper finds that Chief Executive Officer overconfidence and financial statements’ comparability are negatively related in both countries. Following the market variation, the different findings suggest that institutional settings such as the general managerial style, adopting international accounting standards (now IFRS) leading to the extent of auditing market globally in Iraq and suffering from international sanctions in Iran, the governing business environment may play an allocative role in preparing financial statements. Originality/value The present research is the first research conducted in two emerging markets (Iran and Iraq) examining the relationship between managers’ narcissism and overconfidence and financial statements’ comparability. Therefore, the present research in this area can significantly contribute to the development of science and knowledge.

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