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.

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.

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.

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.

Factors affecting the voluntary disclosure: a study by using smart PLS-SEM approach

2018 ◽  
Vol 60 (6) ◽  
pp. 1498-1508 ◽  
Author(s):  
Md. Abdur Rouf ◽  
M. Akhtaruddin
Keyword(s):  
Voluntary Disclosure ◽  
Structural Equation ◽  
Reliability And Validity ◽  
Listed Companies ◽  
Annual Reports ◽  
Equation Modeling ◽  
Bench Mark ◽  
Content Type ◽  
Factors Affecting ◽  
Leadership Structure

Purpose This paper aims to examine the factors affecting the voluntary disclosure in the annual reports of listed companies in Bangladesh. Design/methodology/approach The study is based on a sample of 96 listed non-financial companies in Dhaka Stock Exchanges over the period of 2013 to 2016. The study used partial least squares structural equation modeling tool to analyze data which provides evidence of reliability and validity. It also used an unweighted relative disclosure index for measuring voluntary disclosure. Findings The empirical results show that corporate governance (board leadership structure and ownership structures) and firms characteristics (total assets and total sales) are significantly positive correlated with the voluntary disclosure. Originality/value The finding of the study will be a bench mark or the board for policy makers and implementers in torching the avenues of improvement in raising the level of corporate voluntary disclosure in annual reports of listed companies in Bangladesh.

Voluntary disclosure in Italy

2016 ◽  
Vol 11 (2) ◽  
pp. 272-303 ◽  
Author(s):  
Davide Scaltrito
Keyword(s):  
Firm Size ◽  
Voluntary Disclosure ◽  
Stock Exchange ◽  
Listed Companies ◽  
General Information ◽  
Annual Reports ◽  
Industrial Firms ◽  
Content Type ◽  
Resource Information ◽  
Other Information

Purpose – The purpose of this paper is to assess the level of voluntary disclosure in the companies listed on the Italian Stock Exchange. Voluntary disclosure refers to the discretionary release of financial and non-financial information which companies are not obliged to disclose by a standard-setting accounting body. In particular, this paper analyses the effect that certain determinants (leverage, firm size, sector auditor, performance and ownership concentration) could have on voluntary information disclosed by Italian listed companies. In order to do this, 203 annual reports of Italian listed companies for the year 2012 were analysed. Design/methodology/approach – To assess the extent of voluntary disclosure, an index is created and used as a dependent variable in an OLS model to understand the relationship between the above-mentioned determinants. The disclosure score is composed mainly of 38 items per firm (a total of 7,714 items were collected and analysed) regarding firm performance, general information, forward-looking information, human capital, research and development projects, stock market information, segment reporting information and other information. In order to differentiate the information presented in annual reports, a score was assigned to each item on the index (2 points if an item was reported in qualitative and quantitative terms, 1 point if the item was reported in qualitative terms, 0 points if the item was absent). The score is not weighted because all items are equally important for the research purpose. Repeated information is considered only once. Findings – According to the research findings, human resource information is the voluntary disclosure item reported with the highest frequency, and both firm size and auditors positively affect the total amount of voluntary information disclosed by Italian listed companies. Financial firms provide a lower level of voluntary disclosure than do industrial firms. Originality/value – The paper contributes in improving knowledge about Italian firms’ voluntary disclosure of firm-specific determinants, analysing a wide number of items provided in 2012 annual reports.

scholarly journals Pengaruh Current Ratio, Debt to Equity Ratio, Firm Size Terhadap Net Profit Margin Pada Perusahaan Perdagangan Besar Produksi yang Terdaftar di Bursa Efek Indonesia

2020 ◽  
Vol 2 (1) ◽  
pp. 31-44
Author(s):  
Hantono Hantono
Keyword(s):  
Firm Size ◽  
Stock Exchange ◽  
Listed Companies ◽  
Profit Margin ◽  
Coefficient Of Determination ◽  
Current Ratio ◽  
Independent Variables ◽  
Net Profit ◽  
Equity Ratio ◽  
Large Production

This study aims to prove and analyze the effect of the current ratio, debt to equity ratio and firm size on the net profit margin of the large production trading companies listed on the Indonesia Stock Exchange in 2014-2018. The population in this study were 37 large production trading companies listed on the Indonesia Stock Exchange in 2014-2018. Of the 37 listed companies, 17 were selected as sample companies using purposive sampling. The results of the discussion show that simultaneously the results of tests conducted simultaneously Current Ratio, Debt to Equity Ratio and Firm Size affect the Net Profit Margin in large production large trading companies listed on the Indonesia Stock Exchange in 2014-2018. From the results of tests conducted partially the effect of the current ratio on the net profit margin, debt to equity ratio has a significant effect on the net profit margin, firm size does not affect the net profit margin on large production large trading companies listed on the Indonesia Stock Exchange in 2014 -2018 and While the coefficient of determination adjusted (R square) of 22.9%. This means that 22.9% of the effect of net profit margin can be explained by variations of the three independent variables namely the current ratio, debt to equity ratio and firm size. While the remaining 77.1% is explained by other variables not examined in this study.

PENGARUH RASIO KEUANGAN TERHADAP PENCAPAIAN LABA PERUSAHAAN KELOMPOK INDUSTRI MAKANAN YANG TERDAFTAR DI BURSA EFEK INDONESIA

2016 ◽  
Vol 4 (1) ◽  
Author(s):  
Akhmad Sodiqin
Keyword(s):  
Stock Exchange ◽  
Fixed Effect ◽  
Current Ratio ◽  
Return On Equity ◽  
Leverage Ratio ◽  
Food Industries ◽  
Equity Ratio ◽  
Turn Over

The aims of this research are to know influence of finacial ratios which consisted of Current ratio, Debt equity ratio, Leverage ratio, Inventory turn over, and total assets turn over to return on equity simultanously and to know influence of finacial ratios which consisted of Current ratio, Debt equity ratio, Leverage ratio, Inventory turn over, and total assets turn over to return on equity partially. Data was analyzed used fixed effect model.Data which collected for 3 years from 2011 until 2013 comes 8 firms in food industries listed in Indonesian Stock Exchange (IDX). Based on data analyzed was known that finacial ratios which consisted of Current ratio, Debt equity ratio, Leverage ratio, Inventory turn over, and total assets turn over to didn’t influence to return on equity simultanously and finacial ratios which consisted of Current ratio, Leverage ratio, Inventory turn over, and total assets turn over didn’t inluence to return on equity partially but debt equity ratio influence significantly to return on equity.

scholarly journals The Influence of Current Ratio, Debt to Equity Ratio, And Total Asset Turnover Ratio on Profitability of Transportation Companies Listed On the Indonesia Stock Exchange 2014-2018

2020 ◽  
Vol 3 (2) ◽  
pp. 81-93
Author(s):  
Talisa Qamara ◽  
Ani Wulandari ◽  
Agus Sukoco ◽  
Joko Suyono
Keyword(s):  
Sampling Method ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Total Asset ◽  
Current Ratio ◽  
Financial Reports ◽  
Turnover Ratio ◽  
Asset Turnover ◽  
Equity Ratio

This study aims to analyze whether there are simultaneous effects of Current Ratio, Debt to Equity Ratio, and Total Asset Turnover to Pofitability (Return On Asset) on Transportation Company Listed at Indonesia Stock Exchanged. This research use quantitative method. The population on this research is transportation companies listed at Indonesia Stock Exchange (IDX) and continuously published financial reports in 2014-2018. Based on the purposive sampling method, from 71 transportation companies globally converged into 10 transportation companies, so that the data obtained were 50 observation. The analytical method used is multiple linear regression analysis. The results of the study are Current Ratio and Debt to Equity Ratio does not partially affect ROA, while Total Asset Turnover has a partial effect on ROA. And the three independent variables (CR, DER and TATO) simultaneously influence the dependent variable, namely profitability (ROA)

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.

Determinants, persistence and value implications of liquidity creation: an evidence from Indian banks

2021 ◽  
Vol 15 (2) ◽  
pp. 384-400
Author(s):  
Naina Grover ◽  
Pankaj Sinha
Keyword(s):  
Market Share ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Content Type ◽  
Factors Affecting ◽  
Dynamic Framework ◽  
Lending Rate ◽  
Equity Ratio ◽  
Indian Banks ◽  
The Impact

Purpose The purpose of this paper is to explore the micro and macro factors affecting liquidity creation by scheduled commercial banks (excluding Regional Rural Bank) in India from 2005 to 2018. Design/methodology/approach Two measures of liquidity creation, the broad and narrow measures, are constructed using RBI data available on Indian banks. System generalized method of moments has been applied to explore the factors affecting liquidity creation. Findings This study finds high level of persistence in liquidity creation in banks. Variation in the broad measure is explained by equity ratio, market share, GDP, gross savings and lending rate, whereas the narrow measure is explained by equity ratio, market share, size and lending rate. The Global Financial Crisis had a negative effect on liquidity creation as per both the measures, and the impact was more severe for the broad measure as compared to the narrow measure. Research limitations/implications This study finds a positive correlation between bank value and liquidity creation which suggests that the investors favourably evaluate banks that create more liquidity. This study is confined to India only. Practical implications There is a negative influence of capital on liquidity created by banks, which implies a trade-off that exists between financial stability and liquidity creation. Basel III norms impose higher capital and liquidity standards which will have negative implications for liquidity creation. Originality/value To the best of authors’ knowledge, this is the first study in the Indian context that focusses on factors affecting liquidity creation in a dynamic framework and determines the relationship between liquidity creation and market value of a bank.

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