Search Results (99)

This study investigates the impact of environmental, social, and governance (ESG) disclosure on value creation in a balanced panel of 100 non-financial Sharia-compliant firms listed on the Saudi Stock Exchange over the period 2014–2023. The analysis employs a combination of econometric techniques, including fixed effects models with Driscoll–Kraay standard errors, Pooled Ordinary Least Squares (POLS) with Driscoll–Kraay standard errors and industry and year dummies, and two-step system generalized method of moments (GMM) estimation to address potential endogeneity and omitted variable bias. Value creation is measured using Tobin’s Q (TBQ), Return on Assets (ROA), and Return on Equity (ROE). The models also control for firm-specific variables such as firm size, leverage, asset tangibility, firm age, growth opportunities, and market capitalization. The findings reveal that ESG disclosure has a positive and statistically significant effect on firm value across all three performance measures. Furthermore, firm size significantly moderates this relationship, with larger Sharia-compliant firms experiencing greater value gains from ESG practices. These results align with agency, stakeholder, and signaling theories, emphasizing the role of ESG in enhancing transparency, reducing information asymmetry, and strengthening stakeholder trust. The study provides empirical evidence relevant to policymakers, investors, and firms striving to achieve Saudi Arabia’s Vision 2030 sustainability goals. Full article

This study examines the effects of the International Maritime Organization’s (IMO) market-based measures, with a particular focus on the greenhouse gas (GHG) levy and on the financial and operational performance of Korean shipping companies. The analysis estimates that these companies, which play a vital role in global trade, consume approximately 9211 kilotons of fuel annually and emit 28.5 million tons of carbon dioxide. Under the lowest proposed carbon tax scenario, the financial burden on these companies is estimated at approximately KRW 1.07 trillion, resulting in an 8.8% reduction in net profit, a 2.4% decrease in return on equity (ROE), and a 1.1% decline in return on assets (ROA). Conversely, under the highest carbon tax scenario, costs rise to KRW 4.89 trillion, leading to a significant 40.2% decrease in net profit, thereby posing a serious threat to the financial stability and competitiveness of these firms. These findings underscore the urgent need for strategic policy interventions to mitigate the financial impact of carbon taxation while promoting both environmental sustainability and economic resilience in the maritime sector. Full article

This study investigates the relationship between CEO characteristics and firm performance across emerging and developed economies using both panel regression and machine learning techniques. Drawing on Upper Echelons Theory, we examine whether CEO age, tenure, gender, founder status, and appointment origin influence Return on Assets (ROA), Return on Equity (ROE), and market-to-book ratio. We apply the fixed and random effects models for inference and deploy random forest and XGBoost models to determine the feature importance of each CEO trait. Our findings show that CEO tenure consistently predicts improved ROE and ROA, while CEO age and founder status negatively affect firm performance. Female CEOs, though not consistently significant in the baseline models, positively influence market valuation in emerging markets according to interaction models. Firm-level characteristics such as size and leverage dominate CEO traits in explaining performance outcomes, especially in machine learning rankings. By integrating machine learning feature importance, this study contributes an original approach to CEO evaluation, enabling firms and policymakers to prioritise leadership traits that matter most. The findings have practical implications for succession planning, diversity policy, and performance-based executive appointments. Full article

The objective of this paper is to analyse profitability and risk through the return on equity (ROE) measure of the open economy insurance sector in a non-stable economic period with an economic shock chain, during the years 2018–2022, characterised by an overheating economy, the Covid pandemic, the war in Ukraine, and a high-inflation wave. The ROE pyramid decomposition structure is proposed, along with the detailed CARAMEL version. A static and risk (dynamic) decomposition deviation analysis is used. The yearly non-stable drivers of insurance sector profitability deviation were confirmed. Despite this, the most influential were the earnings ratio deviations in either increasing or decreasing ROE alternatives. Solvency positively influenced the ROE deviation. It turned out that earnings and asset quality enormously increase the risk of the insurance sector. Conversely, risk is decreased mainly by liquidity and management. Simultaneously, significant, influential factors were identified. The results can serve as a background for carrying out operations, strategic analysis, and decision-making. Full article

This study investigates the relationship between the business environment and the financial performance of companies engaged in mergers and acquisitions (M&As), with a particular emphasis on how “ease of doing business” (EDB) indicators affect post-merger outcomes, as measured by return on assets (ROA), return on equity (ROE), and profit margin (PM). We consider a sample of 230 firms from fifteen European countries (Bulgaria, Cyprus, Denmark, France, Greece, Hungary, Italy, Germany, Lithuania, The Netherlands, Norway, Poland, Romania, Slovakia, and Spain) grouped according to COFACE criteria for five years (2015–2019). By applying panel data methods, the research highlights that, three years after the merger in low-risk countries, there is an increase in return on equity, better asset recovery, and economies of scale, largely due to effective government policies. The study highlights the differentiated effects of specific EDB sub-indicators, providing insight into how tailored regulatory frameworks can enhance M&A success across varying economic contexts. The business environment can stimulate the performance of firms after mergers and acquisitions if the regulations are friendly to the firms and are adapted to the state of the country’s economy. Full article

This study investigates the relationship between disclosures related to Sustainable Development Goal 7 (SDG 7) and the financial profitability of Romanian commercial banks during the 2017–2023 period. Using an unbalanced panel dataset of 17 banks and applying fixed-effects regression models, the paper examines how transparency around energy-related sustainability practices influences various dimensions of bank profitability: recurring earning power (REP), loan yield (LY), return on assets (ROA), and return on equity (ROE). Macroeconomic energy indicators, such as the energy intensity level of primary energy (EnInt) and renewable energy consumption (REnC), are also controlled for. The findings indicate that SDG 7.1 disclosures are negatively associated with all profitability measures, except for LY, suggesting potential short-term trade-offs between sustainability transparency and financial outcomes. In contrast, SDG 7.2 disclosures positively impact REP, ROA, and ROE, underscoring the financial relevance of renewable energy financing. SDG 7.a disclosures show no significant relationship with profitability, indicating limited operational involvement in global energy cooperation. Additionally, higher energy intensity negatively affects REP and LY, supporting existing evidence that energy efficiency improves banking performance. These findings have implications for banking strategy, emphasizing the need to align sustainability disclosures with business priorities while recognizing the long-term benefits of green finance and energy efficiency. Full article

This study investigates the interactive link between bank performance and financial innovation in Tunisian banking using a mixed-methods research framework that combines econometric approaches and institutional factors. The empirical analysis uses a panel data of 11 commercial banks from the period of 2000–2024 and employs an Autoregressive distributed lag (ARDL) model to estimate short- and long-run impacts of innovation on return on equity (ROE). A composite indicator of Fintech investment, digital service adoption, and innovation productivity characterizes financial innovation. Governance factors like the presence of risk management departments and executive compensation are taken into account. The results reveal a robust positive impact of financial innovation on bank performance in the long run, especially in more concentrated market settings. Risk management supports performance, while inefficient executive compensation is negatively associated with profitability. These findings are confirmed by robustness tests with HAC standard errors. This research contributes to the literature by situating financial innovation in the context of an emerging North African market and produces practitioner-relevant information for policymakers and bank executives interested in ensuring that performance results are consistent with innovation strategy. Full article

This study investigates the heterogeneous impact of bank automation on institutional performance, emphasizing the role of mechatronic systems like automated teller machines (ATMs) and artificial intelligence-based tools such as chatbots and robo-advisors. Using Method of Moments Quantile Regression (MMQR), the analysis examines how these technologies influence key performance indicators, including return on equity (ROE), in the European Union (EU) banking sector from 2017 to 2022. The MMQR method allows for the differentiation of the effects of automation technologies by distinguishing between hardware-based mechatronic systems and software-driven AI solutions, providing a nuanced perspective on the digital transformation within the banking sector. The results highlight the heterogeneous effects of economic, financial, and institutional factors on banking performance in the EU. They emphasize the need for differentiated policy interventions to reduce performance gaps between EU economies and ensure that banks across all member states can leverage financial and technological advancements to enhance profitability. The findings underline the importance of strategic interventions to address digitalization disparities, promote financial inclusion, and establish a regulatory framework that fosters transparency, cybersecurity, and equitable access to AI-driven financial services. Full article

This study aims to rate the impact of the three major risks (credit, capital adequacy, and liquidity) on three financial performance measures (return on equity (ROE), earnings per share (EPS), and price-earnings ratio (PER)). This study stands out as one of the few in its field, and the only one focusing on banks in the Middle East and Africa, to employ the adaptive neural network-based fuzzy inference system (ANFIS) that combines neural networks and fuzzy logic systems. The significance of this study lies in its comprehensive coverage of major risks and performance variables and its application of highly technical, sophisticated, and precise AI techniques (ANFIS). The main findings indicate that credit risk, as measured by the non-performing loans (NPL) has significant impact on both ROE and EPS. Liquidity risk comes second in importance for ROE and EPS, with the loan-deposit ratio (LDR) being the dominant component. In contrast, liquidity risk is the most significant determinant of PER, followed by capital adequacy. Our results also show that CAR, LDR, and NPL are the most significant risk components of capital adequacy, liquidity, and credit risks, respectively. The study contributes to business knowledge by applying the ANFIS technique as an accurate predictor of risk rating. Future research will explore the relationship between risks and macroeconomic indicators and differences among countries. Full article

Measuring financial performance is pivotal not only for assessing a firm’s current health but also for informing strategic decisions that shape its long-term trajectory. This study investigates how macroeconomic volatility affects the firm profitability across five major sectors in Türkiye—industrial manufacturing, food, beverage and tobacco, chemicals and plastics, technology, and energy—during the turbulent period from 2016 to 2023. Using return on assets (ROA) and return on equity (ROE) as performance indicators, we apply panel data regression to test the impact of inflation, interest rates, unemployment, and a novel Macroeconomic Stress Index (MSI), which combines inflation and exchange rate volatility. The results reveal significant sectoral differences: firms in chemicals and manufacturing outperformed others in ROA, likely benefiting from export incentives and scale efficiencies, while energy and food sectors underperformed, constrained by regulations and cost rigidity. Notably, MSI showed a consistent and significant positive effect on both ROA and ROE, suggesting that many firms responded to macroeconomic stress by restructuring operations and improving efficiency. In contrast, interest rates had a strong negative effect on profitability, confirming the sensitivity of firms to financing costs. These findings underscore the need for targeted sector-level policy support and highlight the importance of internal adaptive capabilities in maintaining the firm’s performance under sustained economic stress. Full article

Ignoring the presence of non-performing assets makes efficiency measurement inappropriate and incomplete. Thus, the present study considers non-performing assets as an undesirable output and applies the slack-based efficiency model to measure the efficiency of public sector banks in India during 2004–2005 to 2018–2019. A two-metric performance assessment of sample banks is carried out using mean efficiency and the non-performing assets management ratio. This study is extended to investigate determinants of bank efficiency using a fixed effects model and dynamic panel data regression on the contextual variables. Results show that profitability as measured by return on equity (ROE) and priority sector exposure have had no impact on efficiency. However, cost of deposits and capital adequacy ratio have a significant negative impact on the efficiency of public sector banks in India. Most importantly, the study finds a decline in efficiency in recent years, indicating a necessity of serious efforts for revamping these state-owned banks. Full article

The internationalization process helps firms accumulate business knowledge and experience; however, firms also enjoy the benefit of decreasing risk due to diversification. The Taiwanese food industry has encountered some difficulties in internationalization, including insufficient production capacity, high tariffs, the lack of long-term planning by the government, and inadequate support from internal organizations. Overall, it is relatively problematic for the food industry to achieve internationalization, and Environmental, Social, and Governance (ESG) is the trend of sustainable development for enterprises to fulfill. This paper empirically explores the joint impact of the degree of internationalization and ESG ratings on the financial performance of the Taiwanese food industry from 2015 to 2021. Our empirical results found that international diversification and ESG performance have joint positive and significant effects on the return on assets (ROA), return on equity (ROE), and return on sales (ROS) of the food industry, respectively. This means that the higher the internationalization of overseas companies in the food industry, the better the ESG performance would significantly improve its financial performance. Full article

The issue of key determinants affecting the financial performance of advertising and marketing companies in Central and Eastern Europe remains understudied, despite the industry’s rapid growth and regional specifics. This study investigates financial performance determinants of advertising and marketing companies in four CEE countries (the Czech Republic, Poland, the Slovak Republic, and Ukraine) during 2021–2023, employing the least absolute deviations method. The study examines three financial performance measures (Return on Assets, Return on Equity, and Operating Profit Margin) using three independent variables (Current Ratio, Debt to Equity, and Total Asset Turnover) and control variables such as Company Size, Leverage, and Company Type. The results show that Total Asset Turnover consistently has a significant positive impact on ROA and ROE across all studied countries. The study also identified significant regional variations in liquidity and capital structure impacts, particularly in the Polish market, and uncovered distinct patterns in how financial leverage affects various performance metrics across the studied countries. Specifically, while leverage shows a predominantly negative relationship with ROE in most countries, it positively influences OPM for Polish, Slovak, and Ukrainian companies, suggesting that the role of financial leverage in company performance is highly context-dependent. The novelty of the study lies in a comprehensive investigation of specific determinants of financial performance in the CEE advertising and marketing sector, revealing the crucial role of efficient asset and equity management in the region. Full article

In recent years, extensive research has focused on the relationship between corporate social responsibility (CSR) and financial performance. While past studies have explored this connection, they often faced challenges in quantitatively assessing the effectiveness of CSR initiatives. However, advancements in research methodologies and the development of Environmental, Social, and Governance (ESG) measurement dimensions have led to the creation of more robust evaluation criteria. These criteria use ESG scores as primary reference indicators for assessing the effectiveness of CSR activities. This study aims to utilize ESG indicators from the ESG InfoHub website of the Taiwan Stock Exchange Corporation (TSEC) as benchmarks, comprising 15 items from the environmental (E), social (S), and governance (G) dimensions to form the CSR effectiveness indicators and predict financial performance. The data cover the years 2021–2022 for listed companies, using return on assets (ROA) and return on equity (ROE) as measures of financial performance. With the rapid development of artificial intelligence in recent years, the applications of machine learning and deep learning (DL) have proliferated across many fields. However, the use of machine learning to analyze ESG data remains rare. Therefore, this study employs machine learning models to predict financial performance based on ESG performance, utilizing both classification and regression approaches. Numerical results indicate that two deep learning models, Long Short-Term Memory (LSTM) and Convolutional Neural Network (CNN), outperform other models in regression and classification tasks, respectively. Consequently, deep learning techniques prove to be feasible, effective, and efficient alternatives for predicting corporations’ financial performance based on ESG metrics. Full article

In recent years, businesses have faced growing pressures from stakeholders, including investors, customers, and regulators, to adopt sustainable practices. These pressures stem from the global focus on environmental, social, and governance (ESG) criteria and their association with risk management and corporate resilience. As a result, understanding the connection between sustainability and performance indicators, such as return on equity (ROE) and return on assets (ROA), is crucial to determine whether sustainable practices positively influence financial outcomes or primarily serve to address external expectations. This study seeks to bridge the gap between theoretical frameworks and empirical evidence by employing a rigorous methodological approach—Structural Equation Modeling (SEM)—to assess the impact of sustainability practices on key performance measures. The inclusion of a diverse range of industries from the US and Europe enhances the relevance of the findings, as it facilitates their generalization across developed economies where sustainability initiatives are highly prioritized. Our results are consistent with prior research demonstrating a positive relationship between sustainability and financial performance, particularly in high-development contexts over a medium-term period. These findings carry important implications for managers and policymakers, emphasizing that sustainability is not a compromise but a catalyst for economic and financial profitability. This study contributes to the literature by illustrating how sustainability can simultaneously advance ethical objectives and enhance financial performance, establishing it as a critical area of focus for both academics and practitioners. Full article