The Impact of Firm Characteristics on Corporate Financial Performance in Emerging Markets

2020 ◽  
Vol 11 (4) ◽  
pp. 70-89
Author(s):  
Salah A. Ali ◽  
Mohamed Yassin ◽  
Rania AbuRaya
Keyword(s):  
Financial Performance ◽  
Audit Committee ◽  
Corporate Financial Performance ◽  
Tobin’S Q ◽  
Firm Characteristics ◽  
Return On Assets ◽  
Tobin's Q ◽  
Return On Equity ◽  
The Impact

This study investigates the impact of firm characteristics on the financial performance of companies listed on the Egyptian stock market. Regression model was performed to regress six firm characteristics variables, namely firm size, foreign listing, age, leverage, liquidity, and assets tangibility. The study controlled for five more variables related to corporate governance including board size, board independence, CEO role duality, audit committee, and the quality of external auditor to avert their effect on financial performance. The study used both accounting measures such as return on assets (ROA) and return on equity (ROE) and market-based Tobin's Q Ratio for measuring financial performance. The findings generally indicate that firm characteristics have an impact on both accounting financial performance as measured by ROA or ROE and market-based financial performance as measured by Tobin's Q, with little difference in the level of such impact. These findings revealed that firm characteristics affect corporate financial performance as evaluated by the company or the market.

scholarly journals Impact of Corporate Governance on Financial Performance of Information Technology Companies

2019 ◽  
Vol 8 (3) ◽  
pp. 7460-7464
Keyword(s):  
Information Technology ◽  
Corporate Governance ◽  
Financial Performance ◽  
Audit Committee ◽  
Positive Impact ◽  
Return On Assets ◽  
Return On Equity ◽  
Broad Term ◽  
The Impact ◽  
Information Technology Companies

Corporate Governance is a broad term in today’s competitive world. It is a series of processes, policies, rules, and regulations by which companies are managed and governed. In this perspective, the study attempts to analyze the impact of corporate governance on the financial performance of Information Technology (IT) Companies in India. Specifically, the study analyzed the impact of Board size, Board Composition, and Audit Committee Independence on Return on Assets and Return on Equity, which are considered as measures of financial performance. The findings of the study revealed that there is a significant and positive impact of Corporate Governance on Financial performance of IT companies, and Audit Committee Independence shows the most significant effect on Financial performance. The finding of the study endeavors to contribute to the limited literature available in the context of corporate governance in IT companies in India.

scholarly journals ANALYSIS OF CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE IN THE JORDANIAN INSURANCE SECTOR

2020 ◽  
Vol 8 (3) ◽  
pp. 1310-1320
Author(s):  
Zelhuda Shamsuddin ◽  
Al Majali Muhammad Ahmad Kamel ◽  
Wan Mohd Nazri Wan Daud ◽  
Wan Sallha Yusoff
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Insurance Companies ◽  
Tobin’S Q ◽  
Short Term ◽  
Equity Financing ◽  
Tobin's Q ◽  
Return On Equity ◽  
Insurance Firms ◽  
The Impact

Purpose of the study: This paper aims to examine the impact of capital structure and financial performance of listed insurance companies in Jordon. Methodology: This study used secondary data that was collected from Amman stock exchange and annual report of the selected insurance companies from the year 2007-2017. The static panel data analysis technique is used to examine the impact of capital structure on firm’s performance. The capital structure is measured using short-term debt, long-term debt, and equity financing. Whereas financial performance is measured using Return on Asset (ROA), Return on equity (ROE), and Tobin’s Q. Main Findings: The study findings suggest that capital structure influence the profitability of the listed insurance firms in Jordan. The results also reveal a significantly positive relation between long-term debt to total assets to profitability indicators, namely, return on assets (ROA), return on equity (ROE) and Tobin’s Q. On the other hand, the results also reveal a short-term debt has a significant positive relationship with return on equity (ROE) and returns on assets (ROA). However, a relationship between short-term debt and Tobin’s Q is not statistically significant. Applications of this study: The result of this study may assist the insurance sector in Jordon in making decisions regarding capital structure, which is to significantly rely on equity financing or debt financing to reduce financing risk such as agency cost that borne by the equity holders of the Jordanian insurance firms. Novelty/Originality of this study: The study noted that insurance firms generally play a crucial role in the economic development of every country. This study provides evidence that Jordanian insurance firms need to diversify their sources of financing and not rely significantly on debt financing, as the results prove that equity financing is a profitable source of financing.

scholarly journals The Influences of Sustainability Report and Corporate Governance toward Financial and Entity Market Performance with Political Visibility as Moderating Variable

2017 ◽  
Vol 8 (1) ◽  
pp. 61 ◽  
Author(s):  
Ingrid Panjaitan
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Structural Equation ◽  
Market Performance ◽  
Equation Modeling ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Tobin's Q ◽  
Sustainability Report

The aim of this research was to identify the effect of corporate governance and sustainability report on the financial performance of entities, and corporate governance and sustainability report on the market entity with political visibility as moderating variable. Sustainability report was measured by a dummy variable by the Corporate Governance Scorecard with Indonesian Institute for Corporate Directorship (IICD). Then, financial performance as measured by profitability ratio (ROA) and Liquidity Ratio (CR), as well as the market performance were measured using Tobin’s Q. Meanwhile, the political visibility was measured by the log of total assets. The analysis of the data used Path Analysis method with Structural Equation Modeling (SEM). The analysis shows four results by using political visibility as moderating variable. First, the quality of corporate governance affects the financial performance. Second, the quality of corporate governance influences Tobin’s Q. Third, the sustainability report has an effect on the Return on Assets and current ratio. Last, sustainability report also affects Tobin’s Q.

Environmental, Social, and Governance Disclosure and Financial Performance

2021 ◽  
pp. 244-253
Author(s):  
İsmail Çağrı Özcan
Keyword(s):  
Financial Performance ◽  
Small Body ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Tobin's Q ◽  
Return On Equity ◽  
Rail Industry ◽  
Transport Industry ◽  
Major Criterion ◽  
Governance Disclosure

The environmental, social, and governance (ESG) disclosure performance of the companies is becoming a major criterion for significant stakeholders like shareholders, creditors, and customers. In line with the increasing interest in ESG activities, a growing respective literature emerges. Despite this evolving attraction, the ESG aspects of the transport industry in general, and the rail industry in particular remain relatively untouched except for a small body of research on airlines. This study aims at filling this gap by analyzing how the ESG disclosure performance of the rail companies affect their financial performance, which the authors measure by return on assets (ROA), return on equity (ROE), and Tobin's Q. Based on a sample of 35 rail companies from nine countries over the 2007-2017 period, the analyses show that ESG disclosure performance has a positive and statistically significant association with the ROA of the rail companies.

scholarly journals Effects of Corporate Governance on the Performance of Nepalese Firms

2016 ◽  
Vol 1 ◽  
Author(s):  
Prem Prasad Silwal
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Audit Committee ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Board Size ◽  
Tobin's Q ◽  
Return On Equity ◽  
Explanatory Variables ◽  
Major Factors

The paper examines the effect of corporate governance on the performance of Nepalese firms. Return on assets, return on equity and Tobin’s Q are the dependent variable for firm performance and firm size, leverage, board size, age of the firm, and audit committee are the explanatory variables. Data are collected from annual report of 18 non financial firms listed in NEPSE from 2010 to 2015.The multiple regression models were estimated to test the effect of explanatory variables on firm performance. The result reveals that corporate governance has significant impact on firms’ performance based on return on assets. Board size, and leverage have negative and significant effect on firm performance however age of the firm and audit committee have positive effect on firm performance based on return on equity. While regressing firm performance based on Tobin’s Q, board size and audit committee are the major factors in determining the firm performance.

أثر الأداء المالي للبنوك وقيمتها السوقية على المسؤولية الاجتماعية دراسة تطبيقية على قطاع البنوك والخدمات المالية في بورصة فلسطين

2018 ◽  
Vol 5 (1) ◽  
pp. 515-544
Keyword(s):  
Social Responsibility ◽  
Financial Performance ◽  
Significant Relationship ◽  
Performance Indicators ◽  
Market Value ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Return On Equity ◽  
Earnings Per Share ◽  
The Impact

ملخص: تهدف هذه الدراسة لمعرفة أثر كل من مؤشرات الأداء المالي ومؤشرات القيمة السوقية على المسؤولية الاجتماعية في البنوك المدرجة في بورصة فلسطين خلال الفترة الواقعة (2011 – 2017). واعتمدت الدراسة على المنهج الاستقرائي للجانب النظري والمنهج الاستنباطي التحليلي للجانب التطبيقي للدراسة. أظهرت نتائج الدراسة التطبيقية وجود علاقة إيجابية (طردية) بين كل من العائد على الموجودات، والعائد على حقوق الملكية، وعائد السهم، ومؤشر Tobin’s Q، وملاءمة رأس المال على المسؤولية الاجتماعية، وعلاقة سلبية (عكسية) بين باقي متغيرات الدراسة، ونتيجة ثبوت وجود علاقات فقد تم تطبيق نموذج الانحدار الخطي المتعدد باستخدام اختبار (F)، حيث تم قبول جميع الفرضيات الصفرية بعدم وجود علاقة ذات دلالة إحصائية بين متغيرات الدراسة على المسؤولية الاجتماعية، ماعدا متغير العائد على حقوق الملكية وعائد السهم فقد تم قبول الفرض العدم عند مستوى معنوية أقل من (0.05) وعلية يوجد أثر ذو دلالة إحصائية بين مؤشرات الأداء المالي التقليدية الممثلة في العائد على حقوق الملكية وعائد السهم على المسؤولية الاجتماعية. توصي الدراسة بضرورة قيام سلطة النقد الفلسطينية بدورها في الإشراف على البنوك والتأكد من نسبة المساهمة في المسؤولية الاجتماعية تساوي 2% من صافي الربح على الأقل، وتقديم مكافآت لكل من يلتزم. الكلمات المفتاحية: المسؤولية الاجتماعية، الأداء المالي، القيمة السوقية. Abstract The aim of this study is to investigate the impact of both the financial performance indicators and the market value indicators on social responsibility in the banks listed on the Palestine Stock Exchange during the period (2011-2017). The study used the inductive method for the theoretical part and the deductive analytical approach for the applied part of the study.The results of the applied study showed a positive relationship between the Return on assets, Return on equity, Earnings per share, Tobin’s Q and capital adequacy on Social Responsibility, and negative relation between other variables of the study, There were no statistically significant relationship between the variables of the study on social responsibility, except for the variable return on equity and return on stock. The null hypothesis was accepted at a lower level of significance of (0.05). There is a statistically significant effect between the traditional financial performance indicators represented in thereturn on equity and earnings per share on social responsibility.The multiple linear regression model was applied using the (F-Test) to proof the existence of relationships. All zero hypotheses were accepted. There was no statistically significant relationship between the variables of the study on social responsibility except the variable Return on equity and Earnings per share. Less than (0.05). Accordingly, There is statistically significant impact between the traditional financial performance indicators represented in the return on equity and earnings per share on social responsibility.The study recommends that the Palestinian Monetary Authority should also supervise the banks and ensure that the contribution of social responsibility is equal to at least 2% of the net profit and provide rewards to all those who commit.Keywords: Social Responsibility (SR), financial performance, Market Value. Keywords: Social Responsibility (SR), financial performance, Market Value

scholarly journals Influence of ESGC Indicators on Financial Performance of Listed Pharmaceutical Companies

2021 ◽  
Vol 18 (9) ◽  
pp. 4556
Author(s):  
Alberto A. López-Toro ◽  
Eva María Sánchez-Teba ◽  
María Dolores Benítez-Márquez ◽  
Mercedes Rodríguez-Fernández
Keyword(s):  
Financial Performance ◽  
Structural Equation ◽  
Positive Relationship ◽  
Equation Modeling ◽  
Pharmaceutical Companies ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Return On Equity ◽  
Thomson Reuters ◽  
The Impact

The pharmaceutical industry, concerned about the impact of its activity, has integrated responsible principles and practices with a view to improving its sustainable and financial performance. This study analyzes the relationship between environmental, social, governance, and controversy indicators and financial performance, measured through return on equity (ROA), return on assets (ROE), and Tobin’s Q, which are applied to the listed companies in the Nasdaq US Smart Pharmaceuticals Index. This index is composed of 30 international companies with a presence at the global level. All the data have been extracted from the Thomson Reuters database. The analysis was performed using structural equation modeling implemented with partial least squares. The results confirm the positive relationship between the construct composed of environmental, social, and governance (ESG) indicators and the aforementioned financial ratios. Additionally, a positive relationship of the controversy indicator with Tobin’s Q is supported. This suggests that the pharmaceutical multinationals focus their investments in sustainability on ESG and pay attention to controversies to boost the visibility of the company and thus increase its value. These conclusions confirm that investing in ESG is a profitable strategy. It is also relevant for managers as it increases the profits and the market value of multinational pharmaceutical companies.

scholarly journals Impact of Corporate Governance on Financial Performance: Karachi Stock Exchange, Pakistan

2016 ◽  
Vol 6 (2) ◽  
pp. 401 ◽  
Author(s):  
Aon Waqas Awan ◽  
Javed Ahmed Jamali
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Profit Margin ◽  
Audit Committees ◽  
Board Size ◽  
Good Decision ◽  
Return On Equity ◽  
The Impact

The aim of the research is to understand the impact of corporate governance on financial performance of listed companies on Karachi Stock Exchange Pakistan. Data was collected from forty two companies from different sectors like, insurance, banking, investment banking, and sugar industries. Study includes variables like profit margin & return on equity as a dependent (profitability) and board size, audit committee, annual general meetings & chief executive office (corporate governance). Using Pooled OLS, the result of the study proved those board size and audit committees have positive relationship with Profit margin and Return on Equity, if any independent variable changes it also stimulus the positively changing impact on Return on Equity (ROE) and Audit Committee (AC). This research offers imminent guidelines to the policy and decision makers in any type of firms to take good decision to set their firms hierarchy system.

scholarly journals Effects of Infrastructure Development, Inflation and Economic Growth to Performance Company (ROA, Tobin's Q, PBV): Study on Registered Infrastructure Support Companies in IDX Period 2014-2019

2021 ◽  
Vol 4 (3) ◽  
Author(s):  
Eko Sarjono ◽  
◽  
Kartika Hendra Titisari ◽  
Supawi Pawenang
Keyword(s):  
Economic Growth ◽  
Performance Measurement ◽  
Financial Performance ◽  
Stock Exchange ◽  
Hypothesis Test ◽  
Linear Regression Analysis ◽  
Infrastructure Development ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
The Impact

The financial performance can be used as a benchmark of the ability of an organization or company in achieving its goals. Performance measurement is one of the most important factors for an organization or company, performance measurement is a process of measuring the extent to which a company does work to achieve its goals. The research investigated the impact of infrastructure, economic growth and inflation on financial performance of infrastructure support companies listed in Indonesian Stock Exchange Period 2014-2019 which is proxied by ROA (Return on Assets), Tobin’s Q and PBV (Price to Book Value). The population of this research was the infrastructure support companies listed on the Indonesian Stock Exchange period 2014-2019. Research sampling was conducted using The Purposive Sampling Method. The data analysis was camed out using classical assumption test, multiple linear regression analysis, t-test, F-test and determinan (R2) test with SPSS 21. The research finding showed that the model has an effect on the financial performance as proxied by ROA. So the results of the hypothesis test show that: (1) Infrastructure development has a negative and significant effect on ROA. (2) The inflation rate has a positive and significant effect on ROA. (3) Economic growth has no significant effect on ROA. Meanwhile, the model has no effect on financial performance which is proxied in Tobin's Q and PBV.

Impact of CEO Overconfidence on Firm Performance: An Evidence from S&P BSE 200

2019 ◽  
Vol 23 (3) ◽  
pp. 234-243
Author(s):  
Hardeep Singh Mundi ◽  
Parmjit Kaur
Keyword(s):  
Firm Performance ◽  
Superior Performance ◽  
Annual Reports ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Tobin's Q ◽  
Full Sample ◽  
Forecasting Error ◽  
Research Article ◽  
The Impact

The current research article considers the impact of CEO overconfidence on firm performance for S&P BSE 200 firms. The CEO overconfidence is measured using revealed beliefs (holder 67, long holder and net buyer), press coverage and forecasting error proxies of CEO overconfidence. CEO Overconfidence measures are constructed as per the methodology of Malmendier and Tate (2005b, 2008). Firm performance is measured using Tobin’s Q and return on assets. The data are collected from the Centre for Monitoring Indian Economy (CMIE) prowess, S&P Capital IQ and the annual reports of the sample firms over a period of 15 years starting from 1 April 2000 to 31 March 2015. Regression results for each of the proxy of CEO overconfidence with the proxies of firm performance indicate that large Indian firms with overconfident CEOs enjoy a higher return on assets and Tobin’s Q as compared to the full sample firms. Overconfident CEOs consider themselves better-than-average, are involved with over-investment and show superior performance for the firm. The overconfident CEOs increase firm performance by following optimal levels of investments in the firm.

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