An emperical study into the informal sector: The link between entrepreneurial activity and firm performance

Orientation: Within an emerging market context, the informal sector’s role was deemed critical towards achieving ideals of a developmental state. Given this perceived importance, there was a need to continually study informal sector entrepreneurial activity and its ramifications on firm performance.Research Purpose: This study aimed to understand the link between informal sector entrepreneurial activities and firm performance using a sample of firms operating in Durban, South Africa.Motivation of the study: Exploring those entrepreneurial activities that either enhanced or impeded the informal sector was deemed critical in the effectual and efficient operation of the sector. In driving the firm performance agenda ascertaining the role of factors such as (1) entrepreneurial culture, (2) entrepreneurial education and skills, (3) government and incubation support and finally, (4) access to finance can enhance the informal sector through the provision of evidence-based interventions.Research approach/design/method: A quantitative survey research approach was used to collect data from 152 informal sector businesses operating in the city of Durban in South Africa. A convenience sampling technique was used to access the respondents. Data were analysed using the Statistical Package for Social Sciences (SPSS) programme version 23 using correlation and regression tests.Main findings: The findings revealed the adoption of an entrepreneurship culture, including access to entrepreneurship education and skills to predict a firm’s financial and non-financial performance significantly. Furthermore, it was found that government and incubation support predicted a firm’s financial performance. However, it was also established that government and incubation support had no unique contribution to non-financial performance.Practical/managerial implications: Suggestions were made based on the findings that entrepreneurial activities have a bearing on informal sector business performance. These findings became a helpful intervention towards enhancing the performance of informal businesses.Contribution/value-add: This study contributed to understanding entrepreneurial activities that either enhanced or impeded informal businesses’ performance.

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Corporate Governance, Corporate Entrepreneurship and Firm Performance: Evidence from the Rwandese Manufacturing Industry

Indian Journal of Corporate Governance ◽

10.1177/0974686218806715 ◽

2018 ◽

Vol 11 (2) ◽

pp. 103-121

Author(s):

Etienne Ndemezo ◽

Charles Kayitana

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Financial Performance ◽

Manufacturing Industry ◽

Raw Materials ◽

Corporate Entrepreneurship ◽

Manufacturing Firms ◽

Entrepreneurial Activity ◽

Organisational Form ◽

Entrepreneurial Activities

This study aims to determine effects of corporate governance on corporate entrepreneurship of Rwandese manufacturing firms, and to evaluate effects of corporate governance on performance of Rwandese manufacturing firms. We used two complementary methodological approaches: one which links corporate governance to corporate entrepreneurship; another which uses an augmented Cobb–Douglass production function to associate corporate governance with the firm performance. This study resulted in four main outcomes: first, the background—education and experience—and motivation of top managers contribute significantly to both corporate entrepreneurship and corporate performance; second, the sole proprietorship organisational form harms significantly the firms’ entrepreneurial activities and impacts negatively their financial performance; third, electricity and raw materials expenses are positively and significantly related to financial performance of manufacturing firms; and fourth, even if informal competition has no effect on entrepreneurial activity of manufacturing firms, it harms their financial performance.

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The effects of corporate governance on financial performance and financial distress: evidence from Egypt

Corporate Governance ◽

10.1108/cg-11-2014-0140 ◽

2015 ◽

Vol 15 (5) ◽

pp. 641-662 ◽

Cited By ~ 28

Author(s):

Tamer Mohamed Shahwan

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Financial Performance ◽

Financial Distress ◽

Emerging Market ◽

Negative Relationship ◽

Positive Association ◽

Time Frame ◽

Content Type

Purpose – This paper aims to empirically examine the quality of corporate governance (CG) practices in Egyptian-listed companies and their impact on firm performance and financial distress in the context of an emerging market such as that of Egypt. Design/methodology/approach – To assess the level of CG practices at a given firm, the current study constructs a corporate governance index (CGI) which consists of four dimensions: disclosure and transparency, composition of the board of directors, shareholders’ rights and investor relations and ownership and control structure. Based on a sample of 86 non-financial firms listed on the Egyptian Exchange, the effects of CG on performance and financial distress are assessed. Tobin’s Q is used to assess corporate performance. At the same time, the Altman Z-score is used as a financial distress indicator, as it measures financial distress inversely. The bigger the Z-score, the smaller the risk of financial distress. Findings – The overall score of the CGI, on average, suggests that the quality of CG practices within Egyptian-listed firms is relatively low. The results do not support the positive association between CG practices and financial performance. In addition, there is an insignificant negative relationship between CG practices and the likelihood of financial distress. The current study also provides evidence that firm-specific characteristics could be useful as a first-pass screen in determining firm performance and the likelihood of financial distress. Research limitations/implications – The sample size and time frame of our analysis are relatively small; some caution would be needed before generalizing the results to the entire population. Practical implications – The findings may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the quality of CG practices in a developing market such as that of Egypt and its impact on financial performance and financial distress. Originality/value – This paper extends the existing literature, in the Egyptian context in particular, by examining firm performance and the risk of financial distress in relation to the level of CG mechanisms adopted.

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The financial leverage–financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis

EuroMed Journal of Business ◽

10.1108/emjb-04-2021-0056 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Ismail Kalash

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Financial Distress ◽

Emerging Market ◽

Currency Crisis ◽

Ordinary Least Squares ◽

Financial Leverage ◽

Content Type ◽

Distress Risk

PurposeThe purpose of this article is to examine how financial distress risk and currency crisis affect the relationship between financial leverage and financial performance.Design/methodology/approachThis study uses data of 200 firms listed on Istanbul Stock Exchange during the period from 2009 to 2019, resulting in 1950 firm-year observations. Pooled ordinary least squares, random effects, firm fixed effects and two-step system GMM models are used to investigate the hypotheses of this study.FindingsThe results reveal that financial leverage has negative and significant effect on financial performance, and that this effect is stronger for firms with higher financial distress risk. Furthermore, the findings provide moderate evidence that currency crisis exacerbates the negative association between leverage and performance.Practical implicationsThe results of this study have important implications for firms in emerging markets. Managers can enhance firm performance by reducing the level of financial leverage, especially in firms with higher financial distress risk. These firms incur higher debt costs, and then they can benefit more from the decreases in debt ratio in their capital structure. Moreover, the decreases in debt level have more importance in currency crisis times, when the access to external finance becomes more expensive and more difficult.Originality/valueTo the author's knowledge, this research is the first to examine the effect of currency crisis on the financial leverage–financial performance relationship and is one of few that investigate the role of financial distress risk in determining the linkage between leverage and firm performance.

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BOARD COGNITIVE DIVERSITY AND FIRM PERFORMANCE NEXUS: EVIDENCE FROM NIGERIA

International Journal of Management Innovation & Entrepreneurial Research ◽

10.18510/ijmier.2020.629 ◽

2020 ◽

Vol 6 (2) ◽

pp. 88-99

Author(s):

Hope Osayantin AIFUWA ◽

Saidu MUSA ◽

Nusirat Ojuolape GOLD ◽

Muhammed Kamaldeen USMAN

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Least Squares ◽

Consumer Goods ◽

Educational Level ◽

Market Performance ◽

Educational Background ◽

Board Members ◽

Research Approach ◽

Cognitive Diversity

Purpose of the study: This study examined the influence of board cognitive diversity on firm performance in Nigeria. The researchers investigated consumer goods firms listed in the Nigeria Stock Exchange from 2013 to 2018. Methodology: This research is hinged on the positivist research philosophy; and the deductive research approach. The study adopted the multi-method quantitative research design. Data was hand-collected from the annual financial statements and firms’ websites of consumer goods firms. The researchers measured board cognitive diversity by educational level diversity, education background diversity, and professional member diversity; while performance was measured via financial performance (ROA) and market performance (Tobin's Q). Panel least squares were used to estimate the model of the study. Main Findings: Results from the panel least squares regression revealed mixed findings on the nexus between the proxies of board cognitive diversity and firm performance in Nigeria. Specifically, we found that education level diversity and professional member diversity of board members positively and significantly affects market performance. In contrast, the educational background diversity of the board negatively and significantly affects the market performance of consumer goods firms in Nigeria. Furthermore, we found no evidence on the nexus between educational level diversity; educational background diversity; professional membership diversity of board members, and financial performance of firms investigated. Implications/Applications: The researchers concluded that board cognitive diversity partially influences firm performance in Nigeria. The study recommended that firms in Nigeria, specifically consumer goods firms, should encourage more representation of board directors with a postgraduate degree. This is because they have advanced knowledge and expertise to improve the firm's performance. Novelty/Originality of this study: This is pioneer research to investigate the influence of board cognitive diversity on firm performance in Nigeria.

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Board Structure and Firm Performance:Evidence from Emerging Market

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.e4834.018520 ◽

2020 ◽

Vol 8 (5) ◽

pp. 2305-2311

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Financial Performance ◽

Corporate Performance ◽

Emerging Market ◽

Small Sample ◽

Independent Director ◽

Board Structure ◽

Board Size ◽

Firm Financial Performance

This paper fulfils the purpose by studying the effect of corporate board structure i.e., board size and independent director on firm financial performance for selected focused and diversified Indian companies. This study analyses the corporate governance structure of 76 Indian companies (60 focused and 16 diversified companies) listed on the BSE-Sensex for ten years from the year 2007-2016 using panel data analysis. The empirical findings showed a positive relationship of board size with firm performance and significant negative association of independent director with the corporate performance of focused Indian firms, while in the diversified Indian firm, board size found to be positively related to financial performance and independent director found to be negatively related to corporate performance. The result has shown that board structure has seemed to be significant in listed focused firm with firm performance while board structure of diversified firm seems to be insignificant with firm performance, it might be because of small sample size and dynamics of an emerging economy in India which is different from the developed economies of the world. This study implied that in emerging or developing economy like India, lower independent director usually boost company value, and adequate board size will significantly impact on firm performance both in case of focused and diversified firms. This research paper contribute and fill existing gap in literature on corporate governance by examining and establishing relation between firm performance and board structure with focused and diversified Indian firms.

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The moderating role of director’s financial expertise in political connections and corporate financial performance in Pakistan

Accounting ◽

10.5267/j.ac.2021.1.022 ◽

2021 ◽

pp. 865-874

Author(s):

Murtaza Masud Niazi ◽

Zaleha Othman ◽

Sitraselvi Chandren

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Emerging Market ◽

Political Influence ◽

Political Connections ◽

Political Connection ◽

Firm Financial Performance ◽

Financial Expertise ◽

The Impact ◽

The Relationship

Prior theoretical and empirical studies have suggested that political influence affects the application of corporate governance and firm performance enormously. However, several fundamental questions remain to be answered. To fill this knowledge gap,the study's main objectives are examining the direct impact of political connection on firm financial performance in Pakistani non-financial listed companies and the moderating effect of director's financial expertise on political connections and firm financial performance. The study utilised panel data of 220 firms from 2008 to 2017 and used panel corrected standard error regression analysis. The results show that political connection negatively impacted firm financial performance, and director financial expertise as a moderator strengthened the relationship between political connections and firm financial performance. This study's results supported political economy theory in that weak judicial systems and unstable political systems have immense effects on investor’s rights. The study contributes to extending the existing literature on political connection by providing evidence of the impact of politically connected firms on firm performance in an emerging market. The study also deliberates on how the director’s financial expertise contributes towards the relationship. The findings could be generalised to other countries with similar degrees of development and culture.

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Corporate Social Responsibility and Firm Performance: Evidence from an Emerging Market

Accounting and Finance Research ◽

10.5430/afr.v6n4p42 ◽

2017 ◽

Vol 6 (4) ◽

pp. 42 ◽

Cited By ~ 8

Author(s):

Elif Akben Selcuk ◽

Halil Kiymaz

Keyword(s):

Corporate Social Responsibility ◽

Firm Performance ◽

Social Responsibility ◽

Financial Performance ◽

Emerging Market ◽

Negative Relationship ◽

Annual Reports ◽

Socially Responsible ◽

Return On Assets ◽

Corporate Social

This study focuses on the relationship between firm performance and corporate social responsibility (CSR) of firms listed on Borsa Istanbul during the period of 2009-2011. We use content analysis of annual reports/websites of Turkish firms for any socially responsible activities. We find a negative relationship between CSR and financial performance, meaning that firms which disclose more information about CSR initiatives in their annual reports have a lower return on assets. After controlling for debt and size of the firms, we further find that while highly levered firms are less profitable, larger firms have higher profits. Finally, we do not find any significant relationships between research and development expenditures and financial performance.

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EXPRESS: Unbundling the Effects of Internationalization on Firm Performance in Emerging Economies: The Moderating Effects of Strategic Resource Decisions

Journal of International Marketing ◽

10.1177/1069031x211030686 ◽

2021 ◽

pp. 1069031X2110306

Author(s):

Nilay Bicakcioglu-Peynirci ◽

Robert E. Morgan

Keyword(s):

Firm Performance ◽

Emerging Economies ◽

Emerging Market ◽

Strategic Marketing ◽

Slack Resources ◽

Moderation Effect ◽

Strategic Resource ◽

And Performance ◽

Resource Decisions ◽

The Relationship

We investigate how strategic resource decisions—concerning slack resources and strategic marketing ambidexterity—influence the relationship between internationalization and firm performance of emerging market firms. Based upon the resource-based view, we synthesize two dominant, yet divergent, perspectives that explain the respective resource slack advantages and liabilities in the internationalization literature: the flexible capacity and the efficient capacity perspectives. We also explore the moderating role of strategic marketing ambidexterity which comprises a bundle of marketing activities covering both exploitation-dominant actions and exploration-dominant actions. We empirically examine our hypothesized relationships with data from a sample of 1,683 firm-year observations for the period between 2005 and 2018 and find that distinct forms of resource slacks have contrasting effects on the relationship between internationalization and performance. Our results provide strong evidence for positive moderation effect of unabsorbed slack resources and a negative moderation effect of absorbed slack resources on the internationalization-performance relationship. We also indicate nonsignificant moderating effect of strategic marketing ambidexterity, demonstrating that internationalization attains higher firm performance regardless of its exploration-dominant or exploitation-dominant strategic emphasis in emerging economies.

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