Differentiating the impact of CSR strengths and concerns on firm performance

2017 ◽  
Vol 36 (3) ◽  
pp. 401-409 ◽  
Author(s):  
Albi Alikaj ◽  
Cau Ngoc Nguyen ◽  
Efrain Medina
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Latent Variables ◽  
Multinational Enterprises ◽  
Content Type ◽  
Future Studies ◽  
Domestic Firms ◽  
Firm Financial Performance ◽  
Individual Effects ◽  
The Impact

Purpose The purpose of this paper is to assess the Kinder, Lydenberg, Domini & Co. (KLD) dimensions by distinguishing between corporate social responsibility (CSR) strengths and concerns and examine their individual effects on firm financial performance. Additionally, the study distinguishes between US domestic firms and multinational enterprises (MNEs) to provide additional insights and explore if any differences exist. Design/methodology/approach Data from the KLD and Compustat databases are analyzed for a sample of 562 US firms, of which 359 are multinational corporations, and 203 operate solely in the USA. A path analysis was used to examine the effect of CSR strengths and concerns on firm financial performance. Findings The findings show that increases in CSR strengths as well reductions in CSR concerns are positively linked to firm financial performance. The results also suggest that addressing concerns would be more beneficial to MNEs as opposed to US domestic firms. Research limitations/implications First, it should be noted that this study is cross-sectional, thus limiting confirmation of causality. Future studies can confirm causality by conducting longitudinal analysis. Also, some country-specific regulations require firms to make certain CSR-related information publicly available. Future studies can focus on countries that have such regulations and make comparisons with countries that allow firms to decide for themselves whether or not to make CSR-related activities publicly available. Originality/value When measuring CSR, previous studies have combined the CSR strengths and concerns latent variables of the KLD database. This can potentially be a problem because CSR strengths and concerns are not meant to measure the same issues. By separating them into two distinct latent variables, the authors can better understand their individual effects on firm performance.

Board gender diversity, board compensation and firm performance. Evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taha Almarayeh
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Least Squares ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Firm Financial Performance ◽  
Board Compensation ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to analyze the relationship between board gender diversity, board compensation and firm financial performance in the developing country, Jordan, whose cultural, economic and institutional context is very different from most previously analyzed countries’ context. Design/methodology/approach Ordinary least squares regression was used to examine the association between board gender diversity, board compensation and firm financial performance in a sample of 510 firm-year observations during the years 2009–2018. Generalized least squares estimation method was used to confirm that the results are robust. Findings The author provides new evidence that board gender diversity does not contribute to firm financial performance. The author also detects that there is a positive relationship between board compensation on firm financial performance. Originality/value This paper examines the under-researched relationship between board gender diversity, board compensation and firm financial performance. In so doing, the author tries to provide new insights into this relationship within the developing context, the case of Jordan that has a different environment from that of advanced markets. To the best of the researcher’s knowledge, this is almost certainly the first research to investigate the impact of board gender diversity and board compensation on firm financial performance in the Jordanian market. This manuscript is expected to be used as a reference by the regulators and policymakers – both in Jordan and other countries with a similar institutional, cultural setting – to provide a deep understanding of the impact of board gender diversity and board compensation on the firm performance.

Corporate social responsibility and financial performance nexus

2018 ◽  
Vol 9 (3) ◽  
pp. 301-328 ◽  
Author(s):  
Joseph Dery Nyeadi ◽  
Muazu Ibrahim ◽  
Yakubu Awudu Sare
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Positive Impact ◽  
Public Investment ◽  
Data Set ◽  
Content Type ◽  
The Public ◽  
Firm Financial Performance ◽  
Corporate Social ◽  
The Impact

Purpose The paper aims to investigate empirically the impact of corporate social responsibility (CSR) on financial performance in South African listed firms. Design/methodology/approach The paper uses panel corrected standard errors to estimate the effect of CSR on firm financial performance and thus addresses contemporaneous cross-correlations across the panel cross sections. The study uses a broad base measure of CSR created by the Public Investment Corporation data set and the combination of accounting and economic means of measuring firm financial performance. Findings CSR is found to have a strong positive impact on firm financial performance in South Africa. When CSR is decomposed further into its major components, governance performance positively impacts a firm’s financial performance with no evidence of any relationship between social components and firm performance and between environmental components and firm performance. The positive impact of CSR on firm performance is greater in big firms. At the industry level, CSR is noticed to impact positively on financial performance in the extractive industry via good governance and responsible environmental behaviors. It however has no impact on firm performance in the financial sector. Research limitations/implications The results should be interpreted with caution and some limitations. Due to the limiting nature of the Public Investment Corporation data set (the survey was carried out on selected firms on the Johannesburg Stock Exchange for three years spanning from 2011 to 2013). This resulted in a sample of 56 firms. It is therefore very problematic to generalize the findings to a larger population over a long period of time. This is more limiting especially on individual sector studies where the sample has further shrunk to a smaller sample. As a result of the smaller sample size, the authors were unable to explore some other sectors which could have given more revealing findings. The authors recommend that future research should explore other data sets or use primary data approach that can allow for more sample size and elongated time period for a more holistic view and for easy generalization of the findings. The authors also identify an important lacuna necessitating further research effort. It would be interesting to empirically examine the threshold point of firms’ size beyond which CSR damages firms’ performance. Knowledge of this will guide managers of firms in their strategic CSR decision. Practical implications This study does not only serve as a reference work for subsequent investigations into the impact of CSR on firm performance in sub-Saharan Africa but also serves as a guide to policymakers on the financial impact of CSR adoption. Originality/value This study is one of the pioneering works that comprehensively examines the effect of CSR on financial performance amongst South African firms via size and sector and also controls for contemporaneous cross-correlation effects from the firms in the panel set.

Corporate governance guidelines compliance and firm financial performance

2016 ◽  
Vol 31 (8/9) ◽  
pp. 891-914 ◽  
Author(s):  
Erick Rading Outa ◽  
Nelson M. Waweru
Keyword(s):  
Corporate Governance ◽  
Life Cycle ◽  
Firm Performance ◽  
Financial Performance ◽  
Firm Value ◽  
Design Methodology ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the impact of compliance with corporate governance (CG) guidelines during the period 2002-2014 on firm financial performance and firm value of Kenyan-listed companies. Design/methodology/approach Using panel data of 520-firm year’s observations between 2005 and 2014, the authors test the hypothesis that compliance with CG guidelines issued in 2002 by Capital Markets Authority (CMA) improved firm financial performance and firm value. Findings Compliance with CG Index which is an aggregate of all the CG guidelines is positively and significantly related to firm performance and firm value. Board evaluation is also positively and significantly related to firm performance. The findings suggest that CG guidelines are associated with firm financial performance and firm value. Originality/value The authors provide evidence on the relationship between CG practices and firm financial performance and firm value in Kenya. Second, the authors provide evidence on board evaluation which has not been tested before in a “comply or explain” environment. Finally, they evaluate how CMA 2002 CG guidelines steered firm financial performance and firm value over its life cycle from 2002 to 2014. These results are important to CMA and other CG regulators and boards in their efforts to improve CG practices in the region.

Impact of audit committee characteristics and external audit quality on firm performance: evidence from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waleed M. Al-ahdal ◽  
Hafiza Aishah Hashim
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Audit Committee ◽  
Audit Quality ◽  
Random Effect ◽  
Policy Formulation ◽  
External Audit ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact

Purpose The purpose of this paper is to analyse the influence of audit committee characteristics and external audit quality on the performance of non-financial public limited companies listed on the National Stock Exchange 100. Design/methodology/approach One-way random effect panel data regression was applied to 74 non-financial firms in the Nifty 100 from 2014 until 2019. The overall audit committee index and external audit index were built based on the new Indian Companies Act, 2013 and on a review of the literature to capture the impact of the new Act on firm financial performance. Findings The outcome of the study revealed that there is lack of evidence to show that audit committee characteristics improve the performance of top Indian non-financial listed firms. However, external audit quality was found to have a significant positive impact on the financial performance of firms as measured by Tobin’s Q, while firm size and leverage were found to have a significant impact on the financial performance of firms as measured by return on assets and return on equity. Practical implications This paper will be greatly beneficial for financial practitioners and policymakers because it provides practical suggestions and recommendations about the types of external audit that are indispensable for the overall effectiveness and performance of firms. The study findings may also aid strategic policy formulation and execution for better corporate governance practices for the purpose of profit and wealth maximisation. Originality/value To the best of the authors’ knowledge, to date, no previous research has evaluated the effects of audit committee features and external audit quality on the financial performance of firms in India after the implementation of the new Companies Act, 2013. Hence, this study fills this void in the present literature by examining the overall features of the audit committee and external audit and their impact on firm performance in the setting of India.

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.

Intellectual capital in Ugandan service firms as mediator of board governance and firm performance

2014 ◽  
Vol 5 (3) ◽  
pp. 300-340 ◽  
Author(s):  
Stephen Korutaro Nkundabanyanga ◽  
Joseph M. Ntayi ◽  
Augustine Ahiauzu ◽  
Samuel K. Sejjaaka
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Predictor Variable ◽  
Mediating Effect ◽  
Board Governance ◽  
Content Type ◽  
Firm Financial Performance ◽  
Starting Point ◽  
The Relationship

Purpose – The purpose of this paper is to examine the mediating effect of intellectual capital on the relationship between board governance and perceived firm financial performance. Design/methodology/approach – This study was cross-sectional. Analyses were by SPSS and Analysis of Moment Structure on a sample of 128 firms. Findings – The mediated model provides support for the hypothesis that intellectual capital mediates the relationship between board governance and perceived firm performance. while the direct relationship between board governance and firm financial performance without the mediation effect of intellectual capital was found to be significant, this relationship becomes insignificant when mediation of intellectual capital is allowed. Thus, the entire effect does not only go through the main hypothesised predictor variable (board governance) but majorly also, through intellectual capital. Accordingly, the connection between board governance and firm financial performance is very much weakened by the presence of intellectual capital in the model – confirming that the presence of intellectual capital significantly acts as a conduit in the association between board governance and firm financial performance. Overall, 36 per cent of the variance in perceived firm performance is explained. the error variance being 64 per cent of perceived firm performance itself. Research limitations/implications – The authors surveyed directors or managers of firms and although the influence of common methods variance was minimal, the non-existence of common methods bias could not be guaranteed. Although the constructs have been defined as precisely as possible by drawing upon relevant literature and theory, the measurements used may not perfectly represent all the dimensions. For example board governance concept (used here as a behavioural concept) is very much in its infancy just as intellectual capital is. Similarly the authors have employed perceived firm financial performance as proxy for firm financial performance. The implication is that the constructs used/developed can realistically only be proxies for an underlying latent phenomenon that itself is not fully measureable. Practical implications – In considering the behavioural constructs of the board, a new integrative framework for board effectiveness is much needed as a starting point, followed by examining intellectual capital in firms whose mediating effect should formally be accounted for in the board governance – financial performance equation. Originality/value – Results add to the conceptual improvement in board governance studies and lend considerable support for the behavioural perspective in the study of boards and their firm performance improvement potential. Using qualitative factors for intellectual capital to predict the perceived firm financial performance, this study offers a unique dimension in understanding the causes of poor financial performance. It is always a sign of a maturing discipline (like corporate governance) to examine the role of a third variable in the relationship so as to make meaningful conclusions.

scholarly journals Government institutional support, entrepreneurial orientation, strategic renewal, and firm performance in transitional China

2019 ◽  
Vol 25 (3) ◽  
pp. 433-456 ◽  
Author(s):  
Chengli Shu ◽  
Dirk De Clercq ◽  
Yunyue Zhou ◽  
Cuijuan Liu
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Entrepreneurial Orientation ◽  
Transition Economy ◽  
Institutional Support ◽  
Equation Modeling ◽  
Content Type ◽  
Strategic Renewal ◽  
Firm Financial Performance ◽  
The Relationship

PurposeThe purpose of this paper is to examine how entrepreneurial orientation (EO) and strategic renewal (as a critical dimension of corporate entrepreneurship) might transmit government institutional support and thereby enhance firm performance in a transition economy.Design/methodology/approachMulti-respondent data were collected from 230 Chinese-based firms. The hypotheses were tested with structural equation modeling, in combination with a bias-corrected bootstrap method, to assess the significance of the theorized direct and indirect relationships.FindingsGovernment institutional support enhances EO and strategic renewal individually, yet EO also fully mediates the relationship between government institutional support and strategic renewal. Moreover, strategic renewal fully mediates the relationship between EO and firm financial performance, and it partially mediates the relationship between EO and firm reputation.Originality/valueThis study contributes to entrepreneurship literature by testing an organization-level model of entrepreneurial phenomena in established firms that identifies EO and strategic renewal as two distinct mechanisms through which government institutional support in a transition economy can enhance organizational effectiveness, which entails the firm’s financial performance and reputation. In doing so, this study provides an extended understanding of how EO and strategic renewal might influence a firm’s financial and nonfinancial outcomes in different ways.

The relationship between ownership structure and firm financial performance

2018 ◽  
Vol 25 (1) ◽  
pp. 319-333 ◽  
Author(s):  
Tariq Tawfeeq Yousif Alabdullah
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Emerging Economies ◽  
Ownership Structure ◽  
Foreign Ownership ◽  
Fiscal Year ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact ◽  
Practical Implications

Purpose Previous studies that dealt with corporate governance have witnessed gradually significant growth that created some new trends. The purpose of this paper is to be involved in such trends through examining the link between ownership structure as one of the important corporate governance mechanisms and firm performance in Jordan as one of emerging economies. Design/methodology/approach The current study used the multiple regression method to analyze available data for non-financial firms listed in the Amman Stock Exchange for the fiscal year 2012. Findings The findings revealed that managerial ownership has a positive impact on performance. On the other hand, the findings surprisingly showed no evidence to support the impact of foreign ownership on performance. Moreover, there is a significant evidence to support the fact that company size has no impact on firm performance. The findings also revealed that industry type has no impact on firm performance. Practical implications The practical implications of the current study demonstrated that good corporate governance is imperative to all organizations and must be encouraged for the interest of all stakeholders. Unlike the majority of the previous studies, the current study unexpectedly found that foreign ownership is not significantly contributing to the firm performance. Thus, Jordanian Government and other related/responsible parties should formulate policies for the foreign investors. Originality/value Interestingly, from developed and developing countries perspective, the study is the first of its kind that exclusively chose the mechanisms of ownership structure in its relationship with firm performance represented by market share, where no previous study has tested foreign ownership in such relationship. In that, this study is the first study in emerging economies to investigate such a link. Such new insights on this relationship by current study provide helpful information that is of great value to the government, academics, policy makers, and other stakeholders.

Corporate social responsibility and firm financial performance

2017 ◽  
Vol 32 (3-4) ◽  
pp. 106-133 ◽  
Author(s):  
Mingming Feng ◽  
Xiaodan Wang ◽  
Jerry Glenn Kreuze
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Industrial Sector ◽  
Content Type ◽  
Firm Financial Performance ◽  
Stakeholder Groups ◽  
Heterogeneous Nature ◽  
Corporate Social ◽  
Industry Sectors ◽  
Practical Implications

Purpose Despite the intensive research on corporate social responsibility (CSR) and firm financial performance, little is known about how the linkage between CSR and firm financial performance is heterogeneous across industries and how the performance implications are differentiated among specific categories of CSR activities. The purpose of this paper is to explore how the association between a firm’s engagement in CSR and firm financial performance is heterogeneous across industries and CSR categories. Design/methodology/approach Using a sample of 17,083 firm-year observations representing 1,877 firms from the largest 3,000 US companies during years 1991 and 2011, the authors compare the association between CSR and firm financial performance across ten industry sectors defined by Global Industry Classification Standard and across the four CSR categories classified by Mandl and Dorr (2007). Findings The authors find that the association between the overall CSR activities and firm performance is heterogeneous across industries. CSR has significant positive implications for firms from most, but not all, industries. Comparing the performance implication of CSR practices targeting different stakeholder groups, the empirical results indicate that different types of CSR have different influences on financial performance of firms from different industry sectors. Research limitations/implications This study provides new angles for managers in maximizing firm performance through CSR activities and suggests an important and interesting direction for researchers who engage in CSR research. Due to its heterogeneous nature, the CSR-performance relationship needs to be examined more specifically – across industries and different CSR categories. Findings from studies incorporating both company industrial sector and CSR categories would provide more meaningful and practical implications for managers. Practical implications This study provides important managerial implications. First, to maximize firm performance through CSR activities, managers must interpret the linkage between CSR and firm financial performance from the perspective of a specific industrial sector and acknowledge the importance of CSR practices across different CSR categories. Second, the findings suggest that CSR practices aiming at different stakeholder groups generate different financial returns in different industries. Firms engage in CSR to satisfy different stakeholder groups. When budgets are tight, managers may give higher priority to the CSR practices that have stronger effects on firm financial performance. Originality/value This study advances our understanding of the CSR-financial performance relationship by exploring its heterogeneous nature across industry sectors and across specific categories. To obtain the biggest gain from CSR spending, managers must have a good understanding how a specific CSR category can contribute to the financial performance of their particular company in their particular industry.

Does organizational learning lead to higher firm performance?

2015 ◽  
Vol 22 (5) ◽  
pp. 271-288 ◽  
Author(s):  
Wencang Zhou ◽  
Huajing Hu ◽  
Xuli Shi
Keyword(s):  
Organizational Learning ◽  
Firm Performance ◽  
Financial Performance ◽  
Secondary Data ◽  
Positive Association ◽  
Firm Innovation ◽  
Content Type ◽  
Firm Financial Performance ◽  
Positive Correlations ◽  
And Performance

Purpose – The purpose of this paper is to develop a framework for studying organizational learning, firm innovation and firm financial performance. Design/methodology/approach – This paper examines the effects of organizational learning on innovation and performance among 287 listed Chinese companies. Findings – The results indicate a positive association between organizational learning dimensions and firm performance (both objective financial performance and perceptual innovation measure). Research limitations/implications – The sample includes only firms for which secondary data are available. Different results might have been obtained if we include smaller, private firms into the sample. This paper only includes a limited number of measures of financial performance to assess the relationship between organization learning dimensions and firm performance. Therefore, researchers are encouraged to test the proposed propositions further with different performance measures. Practical implications – The results showed that it is the combination of several learning characteristics and not a single dimension that influenced the variance of firm performance. The findings reinforce the notion that systemic interventions that address a variety and different combinations of learning organization characteristics will be more likely to be successful than interventions that solely focus on singular or a limited number of dimensions. Originality/value – The integration of objective measures of firms’ financial performance with perceptual survey data represents a unique methodology that has not been widely used in the organizational learning literature. The positive correlations between the eight learning dimensions and the measures of firms’ performance lend credence to the efficacy of the organizational learning concepts.

Sign in / Sign up

Export Citation Format

Share Document