scholarly journals International diversification and firm’s value: evidence from developing nations

2016 ◽  
Vol 26 (2) ◽  
pp. 166-183 ◽  
Author(s):  
A.N. Bany-Ariffin ◽  
Bolaji Tunde Matemilola ◽  
Liza Wahid ◽  
Siti Abdullah
Keyword(s):  
Financial Performance ◽  
Multinational Corporations ◽  
Multinational Firms ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
International Diversification ◽  
Technological Advancement ◽  
Reverse Causality ◽  
Content Type ◽  
The Impact

Purpose This paper aims to evaluate the impact of international diversification, through the investment abroad activities of the Malaysian multinational corporations (MNCs), on their financial performance. Design/methodology/approach The paper applies the panel generalized method of moments (GMM) estimation technique that gives better results. Findings The empirical findings show that the move to invest abroad has brought a positive impact on Malaysian MNCs’ financial performance. However, in terms of a firm’s risk, the results contradict the general internationalization-risk hypothesis. Research limitations/implications The study focuses on the top 100 multinational firms; future researchers may extend the time period and use the entire sample of all the multinational firms. Practical implications Foreign investments offer rewarding returns due to cheaper labour and raw materials, competitive edge in terms of technological advancement and larger market opportunities. Originality/value The paper contributes to the literature using the panel GMM’s estimation that effectively control for reverse causality and serial correlation problem. The paper also contributes to the international diversification and performance relationship, in a fast-growing Malaysia.

The impact of within-industry diversification on firm performance

2018 ◽  
Vol 13 (6) ◽  
pp. 1475-1501 ◽  
Author(s):  
Varaporn Pangboonyanon ◽  
Kiattichai Kalasin
Keyword(s):  
Financial Performance ◽  
Positive Impact ◽  
Labor Costs ◽  
Institutional Perspective ◽  
Product Lines ◽  
Content Type ◽  
Linear Pattern ◽  
Coordination Costs ◽  
Industry Diversification ◽  
The Impact

Purpose The purpose of this paper is to investigate how within-industry diversification affects the financial performance of small- and medium-sized enterprises (SMEs) in emerging markets (EMs). The authors draw on both the resource-based view and the institutional perspective and argue that within-industry diversification can enhance the financial performance of SMEs in EMs. Due to institutional voids in emerging economies, SMEs can gain additional benefits from scope economies, as well as from market returns, by filling product market voids and gaps in business ecosystems, while also enjoying low input and labor costs that reduce the coordination costs of diversification. This, in turn, enhances benefits of within-industry diversification, thereby resulting in higher financial profitability. Design/methodology/approach This study employs panel data econometrics to estimate the model. The authors test hypotheses on 195 firms, originating from five countries in Southeast Asia, during the period of 2009–2014. Findings The empirical results support the arguments. Within-industry diversification has a positive impact on the performance of SMEs in EMs. These effects become weaker when the institutional contexts are more developed. Nevertheless, such effects become stronger when SMEs in EMs are more efficient. Research limitations/implications The relationship between within-industry diversification and performance is a positive linear pattern, which differs from the pattern in advanced economies. In addition to unrelated diversification, the related diversification is preferable for firms in EMs. Practical implications The paper provides implications for SMEs that aim to enhance their performance by engaging in single product lines and within-industry diversification. Originality/value This paper examines the different ways within-industry diversification can enhance SMEs performance in EM contexts.

The bright and dark sides of green customer integration (GCI): evidence from Chinese manufacturers

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taiwen Feng ◽  
Hongyan Sheng ◽  
Minghui Li
Keyword(s):  
Financial Performance ◽  
Information Sharing ◽  
Positive Impact ◽  
Resource Dependence Theory ◽  
Dark Side ◽  
Opportunistic Behavior ◽  
Moderating Effects ◽  
Customer Integration ◽  
Content Type ◽  
The Impact

PurposeBased on resource dependence theory and transaction cost economics this study explores how green customer integration (GCI) affects financial performance via information sharing and opportunistic behavior, and the moderating effects of dependence and trust.Design/methodology/approachThis study develops a theoretical model and tests it using data from two-waved survey data of 206 Chinese manufacturers. The hypotheses were tested using hierarchical linear regression analysis.FindingsThe results show that GCI has a significant and positive impact on information sharing, but its impact on opportunistic behavior is insignificant. Notably, information sharing has a significant and positive impact on financial performance, while opportunistic behavior has an insignificant impact on financial performance. In addition, dependence negatively moderates the impact of GCI on information sharing and positively moderates the impact of GCI on opportunistic behavior. Trust negatively moderates the impact of GCI on opportunistic behavior.Originality/valueAlthough GCI has received widespread attention, how it affects a firm's performance remains unclear. Most previous studies have focused only on its bright side and ignored its dark side. This study highlights how GCI affects financial performance through information sharing and opportunistic behavior, and the moderating effects of dependence and trust. This enriches the understanding of how and under what conditions GCI affects a firm's performance.

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

Do firm-specific risks affect bank performance?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Imran Hunjra ◽  
Asad Mehmood ◽  
Hung Phu Nguyen ◽  
Tahar Tayachi
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Bank Performance ◽  
Content Type ◽  
Nonperforming Loans ◽  
Operational Risks ◽  
Bank Managers ◽  
The Impact

PurposeThe authors examine the impact of credit, liquidity and operational risks on the financial performance of commercial banks of South Asia.Design/methodology/approachData are extracted from DataStream of 76 commercial banks of four countries, i.e. Pakistan, India, Bangladesh and Sri Lanka for the period 2009–2018. The generalized method of moments (GMM) is used to analyze the results.FindingsAll three risks are significantly associated with financial performance. The authors find that Z-score positively affects the bank performance, whereas the nonperforming loans (NPLs) ratio has a negative impact on financial performance of bank. Liquidity risk analyses show the current and loan-to-deposit (LTD) ratios positively and negatively, respectively, affect financial performance. While operational risk positively affects financial performance. The authors further present the significant effects of joint occurrence of credit and liquidity risks on financial performance.Practical implicationsFor managing credit risk, banking management should ensure the policies for granting loans and timely reimbursement of the loan installments from customers. Bank managers should regularly monitor the liquidity position by maintaining the necessary levels of loans and deposits. Management should retain a healthy capital charge to meet operational risks.Originality/valueCredit, liquidity and operational risks are considered the most important categories of risk which are faced by financial institutions. To the best of the authors’ knowledge, this is the first study which investigates the impact of these risks on banks’ financial performance in selected South Asian countries. The results of this study have relevance and probable generalizability about the impact of risks on the performance of banks in emerging markets.

scholarly journals Disclosure, Shariah governance and financial performance in Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mariem Ben Abdallah ◽  
Slah Bahloul
Keyword(s):  
Financial Performance ◽  
Least Squares ◽  
Good Governance ◽  
Generalized Method Of Moments ◽  
Islamic Banks ◽  
Content Type ◽  
Governance Indicators ◽  
Shariah Governance ◽  
The Impact ◽  
Robustness Check

PurposeThis study aims at investigating the impact of the disclosure and the Shariah governance on the financial performance in MENASA (Middle East, North Africa and Southeast Asia) Islamic banks.Design/methodology/approachWe use the Generalized Least Squares (GLS) regression models to check the interdependence relationship between the disclosure, the Shariah governance and the financial performance of 47 Islamic banks (IBs) from ten countries operating in MENASA region. The sample period is from 2012 to 2019. In these regressions models, Return on Assets (ROA) and Return on Equity (ROE) are the dependent variables. The disclosure and the Shariah governance indicators are the independent factors. To measure the Shariah governance, we use the three sub-indices, which are the Board of Directors (BOD), the Audit Committee (AC) and the Shariah Supervisory Board (SSB). Size, Leverage and Age of the bank are used as control variables. We also used The Generalized Method of Moments (GMM) and the three-stage least squares (3SLS) estimations for robustness check.FindingsResult shows a negative relationship between the disclosure and the two performance measures in IBs. Furthermore, as far as the governance indicators are concerned, we found that the BOD and AC, as well as the BOD and SSB, have a positive and significant impact on the ROA and ROE, respectively. This reveals that good governance had a significant association with higher performance in MENASA IBs.Originality/valueThe paper considers both IBs that adopt mandatory as well as voluntary AAOIFI standards and the GLS method to investigate the impact of the AAOIFI disclosure and the Shariah governance on ROA and ROE. Also, it uses the GMM and the 3SLS estimations for robustness check. It is relevant for researchers, policymakers and stakeholders concerned with IBs' performance.

scholarly journals Empirically examining the impact of corporate social responsibility on financial performance: evidence from Indian steel industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nripinder Kaur ◽  
Vikramjit Singh
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Steel Industry ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

PurposeThis paper aims to examine the impact of corporate social responsibility (CSR) on financial performance (FP) of Indian steel industry in terms of value-added (VAM), profitability (PM), market (MM) and growth measures (GM).Design/methodology/approachIt is an empirical study using secondary data of 40 companies for 14 years collected from CSR/annual reports/official websites of the companies and Prowess database. The panel regression analysis, MANOVA and univariate ANOVA have been conducted to examine the impact of CSR on FP.FindingsThe result indicates a positive impact of CSR on FP in terms of VAM, PM and GM, thereby indicating that more investments in CSR will generate wealth for shareholders, enhance profitability and sales. Moreover, this study shows no noticeable relationship between CSR and MM.Social implicationsThis study contributes to the literature on the CSR–FP relationship and also has implications for managers, investors and other stakeholders. Companies with higher CSR rating create a brand image, attract proficient employees, get greater profit, loyal customers and have less possibility of bribery and corruption. This study may result in being influential to companies confined not only to this sector but also reaching to the others, thus inspiring them to contribute their share of profit for the welfare of society.Originality/valueTo the best of the authors' knowledge, it is the first comprehensive study to examine the impact of CSR on FP of Indian steel industry by considering four dimensions for measuring FP. It provides evidence about the relationship between CSR and FP.

scholarly journals The association between intellectual capital and financial performance in the Islamic banking industry

2019 ◽  
Vol 13 (1) ◽  
pp. 75-93 ◽  
Author(s):  
A.A. Ousama ◽  
Helmi Hammami ◽  
Mustafa Abdulkarim
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Gcc Countries ◽  
The Impact

Purpose The purpose of this study is to empirically investigate the impact of intellectual capital (IC) on the financial performance of Islamic banks operating in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study measures IC by the value added intellectual coefficient model. A regression analysis was used to assess the impact of IC on financial performance. The research sample consisted of Islamic banks operating in the GCC countries during the years 2011, 2012 and 2013. Data originated from the annual reports of Islamic banks. Findings The results support the thesis that IC has a positive impact on the financial performance of Islamic banks. Even though the average IC is lower than that reported in other studies, the positive effect on financial performance is obvious. The findings also show that human capital (HC) is higher than capital employed (CE) and structural capital (SC). The study reveals that SC has an insignificant impact on the financial performance of the Islamic banks compared to CE and HC. Practical implications The findings provide empirical evidence that IC affects the Islamic banks’ financial performance. It helps Islamic banks in the GCC countries to understand how to use their IC efficiently, especially SC as it is yet to be used efficiently. Also, the findings benefit the relevant authorities (e.g. legislators and central banks) who could use them to emphasise strategic policy reforms whenever required. Originality/value The current research adds to the empirical studies in the GCC countries as it views the region as a collective as opposed to individual countries. It also extends the IC and performance measurement literature of Islamic banks in the GCC countries. Moreover, the current study enriches the limited literature on IC in the context of Islamic banking.

Female board members: the effect of director affiliation

2020 ◽  
Vol 35 (2) ◽  
pp. 225-254 ◽  
Author(s):  
Emrah Arioglu
Keyword(s):  
Financial Performance ◽  
Generalized Method Of Moments ◽  
Omitted Variables ◽  
Reverse Causality ◽  
Data Set ◽  
Content Type ◽  
Cultural Setting ◽  
Management Culture ◽  
Female Directors ◽  
Positive Effect

Purpose This study aims to investigate whether female directors have an effect on company financial performance in a patriarchal emerging country that has a collectivistic culture with a substantial gender equality gap and is characterized with a paternalistic management culture. In addition, it aims to investigate whether the affiliations of female directors matter performance-wise in a setting where the majority of the companies are ultimately controlled by large business groups including families. Design/methodology/approach The current study uses a unique hand-collected data set that covers all non-financial public companies quoted at the Borsa Istanbul between the years 2009 and 2017. To investigate the relationships between the presence and ratio of female directors and company financial performance, the current study uses the pooled ordinary least squares method, as well as the firm-fixed effects method to overcome potential omitted variables problems and various generalized method of moments methods to overcome potential reverse causality problems. Findings The findings of the current study demonstrate that the presence and percentage of female directors both have a positive effect on company financial performance in a cultural setting where the opposite might be expected. They also present evidence suggesting that the effect becomes larger as the level of the independence of female directors becomes greater. Originality/value The current study demonstrates that the presence of female directors on boards has a positive effect on company financial performance, even in a cultural setting that is very different from those of countries where the majority of previous studies on female directors are conducted on. In addition, it demonstrates how company financial performance varies with the level of the affiliation of female directors.

Economics of human resources development under globalization era: a study of BRICS countries

2019 ◽  
Vol 43 (7/8) ◽  
pp. 682-698 ◽  
Author(s):  
Samir Ul Hassan ◽  
Motika Sinha Rymbai ◽  
Aasif Ali Bhat
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Human Resources ◽  
Positive Impact ◽  
Generalized Method Of Moments ◽  
Human Resources Development ◽  
Content Type ◽  
Brics Countries ◽  
The Impact ◽  
Resources Development

Purpose The study aims to explore the extent to which human resources development quantifies the economic growth of BRICS countries under the globalization era by controlling country differences. Design/methodology/approach The study used the Generalized Method of Moments (GMM) and Scheffe pairwise comparison tests to quantify the impact of the variables and the level of difference among the BRICS countries onto human Resources development. Findings The study observes that the impact of human resources development on economic growth of BRICS counties is significant but limited to few countries. The study reveals that countries such as India and South Africa are unable to utilize their human resources efficiently to promote economic growth, as compared with Russia, China and Brazil. The study further argues that there is urgent need of amalgam of various economic development theories keeping in mind the regional needs to extract the positive impact from human resource on economic development. Research limitations/implications The single limitation of this research is that it was not possible to compare the results with other developing countries to unleash the capabilities of human resources development with regard to economic growth at the universal level. Originality/value To the best of the authors’ knowledge, this paper is the first of its kind to analyze human resources development at a much deeper level. The paper has chosen variables which are important from the policy perspective of government rather than the working perspective, which is a great contribution. Further, for human index the variables chose covering major aspects of human development from spending perspective.

Effect of digital banking-related customer experience on banks’ financial performance during Covid-19: a perspective from Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nhung Thi Hong Nguyen ◽  
Nguyen Kim-Duc ◽  
Teresa Lien Freiburghaus
Keyword(s):  
Customer Satisfaction ◽  
Financial Performance ◽  
Positive Impact ◽  
Financial Statements ◽  
Customer Experience ◽  
Moderator Variable ◽  
Content Type ◽  
Considerable Impact ◽  
Intermediate Variables ◽  
The Impact

Purpose This study aims to investigate customer experience (CE) and its relationship with intermediate variables to analyze the impact of digital banking (DB) on banks’ financial performance (FP) before Covid-19 and during the lockdown in Vietnam. Design/methodology/approach These research data are from a survey of Vietnamese customers. The survey was deployed to a sample of 238 and 218 customers of 20 Vietnamese commercial banks via email in 2018Q4 and 2020Q2, respectively. FP is measured using banks’ quarterly financial statements before Covid-19 and during the lockdown. Findings CE with DB had a significant and positive impact on FP via customer satisfaction before Covid-19, while the other two intermediate variables (word-of-mouth [WoM] and trust) had no considerable impact. During the lockdown, only WoM had a positive impact on FP. These findings indicate that before Covid-19, when customers could easily interact with their bank through many touchpoints, customer satisfaction with DB services created higher FP for the bank. However, during the lockdown, DB became the customer’s main touchpoint and WoM mediated the CE–FP relationship. Originality/value During the national lockdown from the beginning of the Covid-19 pandemic in January 2020, customers in Vietnam may have had different experiences with DB when no alternate modes of payment were available. The study uses Covid-19 as a moderator variable to offer different viewpoints and findings related to CE with DB and its impact on FP.

Sign in / Sign up

Export Citation Format

Share Document