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The interrelationships among environmental strategy, environmental performance and financial performance have become a subject of ongoing debate. This study investigates the association between environmental strategies and environmental performance by utilizing the generalized method of moments technique to analyze a dataset of listed firms from 2007 to 2018. From a neo-institutional theory perspective, the findings are four-fold. First, environmental strategies are negatively correlated with financial performance. Second, the environmental performance has inversed relationship with financial performance. Third, there is a significant and positive association between the adoption of environmental management practice and environmental performance. Finally, the environmental expenditure-environmental management practice nexus is positively moderated by environmental audits.

This paper investigates the effects of environmental, social and governance (ESG) on financial performance and the moderating effect of intellectual capital (IC) on the relationship between ESG and financial performance. The study performs panel data analysis on data collected from 2,956 manufacturing companies listed on the A-share index of the Shenzhen and Shanghai stock exchanges from 2018 to 2021. Regression results indicate that ESG and management initiatives in implementing ESG have a significant and negative impact on financial performance, whereas the management initiative to control controversial events exerts a significant and positive impact. Investing in ESG and IC at the same time without proper resource allocation will exacerbate the increase in costs and thus reduce financial performance. Companies in the manufacturing sector should therefore consider the challenges and opportunities related to ESG and IC investments. Regulatory frameworks may encourage these companies to align their sustainability and IC strategies, which involve upfront costs. This paper contributes to the literature on the relationship between ESG and financial performance by considering IC as moderator in the context of Chinese manufacturing companies.

Sustainable topics have become increasingly important in recent years, as the world faces growing environmental and social challenges. Environmental, social, and governance (ESG) ratings are tools used to assess the sustainability practices of companies. This study focuses on the impact of environmental, social and governance components on the financial performance of IT companies. The panel data were collected for 43 IT companies operating in the time period from 2004 to 2020. Data include ESG ratings, their components and financial performance indicators of IT companies. The method of OLS regression, a model with fixed individual effects or a model with random individual effects, was used. It was found that the increase in the environmental and social scores has a significant impact on the financial performance of IT companies. This paper is an extended version of our work published in the ITQM 2022.

Incorporating instrumental views of corporate social responsibility (CSR), this paper analyzes CSR in the Chinese context to reveal the media-based mechanism, which clarifies how corporate social responsibility disclosure (CSRD) generates shareholder value. Our results show that firms with better CSRD attract more attention in the media, and high CSRD is positively related to corporate financial performance (CFP), partially mediated by the media coverage. With further investigation, we find that the mediating effect of media coverage is significant only in customer-sensitive industries. This study implies that the strategic use of CSRD to create economic benefits for firms may be of value to managers and investors who desire to understand the effect of CSR and media coverage on firm financial performance.

This study examines the application of CEO turnover on reverse stock splits firms. Using Taiwanese samples, we find that non-CEO turnover firms receive negative long-term abnormal returns, and their financial performances continue to decline following reverse splits. These findings are consistent with prior studies. Contrarily, neither significantly negative long-term abnormal returns nor changes on financial performance were found for CEO turnover firms. This study concludes that applying CEO turnover is suggestive in reverse splits. Additionally, we find that reverse split firms raise debt and concern with their short-term solvency following splits.

Purpose: Classify the characteristics of taxpayers in paying tax compliance based on financial performance, leverage, and tax reporting and analyze the relationship between financial performance and leverage on tax reporting and tax compliance companies.

Design/method: This research was conducted at the Office of the Foreign Investment Tax Service in the Six Regional Offices of the DJP Jakarta, especially the Directorate General of Taxes (KPP PMA ENAM). The population in this study were corporate taxpayers registered at KPP PMA ENAM 2015–2018, namely 750 taxpayers. Sampling using the purposive method obtained as many as 660 companies. Cluster analysis and cross-tabulation were used as analysis methods in this study.

Findings: In particular, corporate tax reporting depends on financial performance, but only on high-level corporate clusters that depend on leverage as well. While in the low company cluster (Cluster 1) tax compliance is influenced by these three variables, in the medium cluster (Cluster 2) tax compliance does not depend on these three variables, while in the high cluster (Cluster 3) tax compliance is only influenced by leverage.

Originality: The cluster analysis method and the cross-tabulation method are used to analyze the effect of the financial performance and leverage variables on the tax reporting and tax compliance variables.

The Firm Value (FV) and Financial Performance (FP), which cover the firm’s operational and financial outputs, are considered as a set of partial organizational effectiveness and financial attitude of stakeholders. Hence, sustainability disclosures contribute value driver factors for firms to maximize the stakeholder’s benefits. The adoption and impact of sustainability disclosure in various industries have been shown by numerous existing studies. Astonishingly, some studies lack the adoption of sustainability disclosure in the aviation industry. These impacts on FV and FP in the aviation industry have received little attention and remain largely unexplored, despite an increase in the sustainability disclosure implementation. Hence, this work will focus on the sustainability disclosure’s impact on the aviation industry and explore the relationship between sustainability disclosure with FV and FP. Data have been considered from 44 airlines from the Thomson Reuters Eikon database from 2017 to 2022. A study of the result has been analyzed by utilizing multiple Regression Analysis (RA). The outcome displayed that variables of environmental and Governance Pillar Score (GS) have a positive relationship with the FP and FV in the aviation industry. Also, it revealed that the relationship between sustainability disclosure and FV and FP has been significantly moderated by the size of firms.

Digitalization is increasingly embracing nearly every part of our private and professional lives. However, whether digitalization is deemed to be a necessity that can boost the performances of small- and mid-size enterprises (SMEs) or it is a frivolous costly investment that hinders corporate activities is still unclear. This paper examines the impact of digitalization on the financial performance of SMEs in the context of an emerging economy. Using a comprehensive firm-level dataset consisting of over 5,000 SMEs in Vietnam during the period from 2005 to 2015, we find that digitalization plays a vital role in facilitating the financial performance of SMEs. Specifically, we find that the investment in computers, an e-mail system, internet connection and e-trading would pay off as it can lead to a significant increase in firm financial performance. We furtherfind that firms can benefit from digitalization because it can significantly improve productivity and sales, and yetdoes not lead to an acceleration in total cost. The positive effect of digitalization on firm performance is even more pronounced during the 2007–2009 global economic crisis, and thus highlights the pivotal role of digitalization in tackling the economic shock.

This empirical study examines the intellectual capital (IC) performance of Hong Kong companies and its association with business performance. Data were collected from constituent companies of the Hang Seng Index listed on the Hong Kong Stock Exchange (2005–2008). An IC measurement, Value Added Intellectual Coefficient (VAIC^TM), was utilised to evaluate the IC investment of the companies.

Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as the indicators of business performance. Regression analyses were conducted to test the ability of IC and its components in order to explain the variance in business performance measures.

No conclusive evidence was found to support the associations between VAIC^TM as an aggregate measure and the four financial indicators. However, components of VAIC^TM were found to predict a substantial variance in business performance. Capital Employed Efficiency (CEE) was found to be a key factor in predicting business financial performance. Structural Capital Efficiency (SCE) was found to have a significant effect on businesses' market valuation, as measured by MB, and on profitability, as measured by ROE. Negative correlations were found between Human Capital Efficiency (HCE) and the financial indicators. The findings indicate a gap between the traditional accounting perspective and the value creation perspective, which is central to the VAIC^TM methodology in measuring IC.

It is believed that the findings of this research provide insights for business stakeholders of Hong Kong companies in utilising IC, particularly the noted impact of structural capital. While our findings indicate the importance of IC for corporations, as shown by the significant effect of SCE on ROE, physical and financial assets may still be considered as the key resources in delivering business success.

The purpose of this paper is to investigate the role of intellectual capital investment in improving the firm's market value, stakeholders' value and financial performance. Using data drawn from 21 listed companies in Tunisia Stock Exchange, we conducted two studies. On one hand, from using Charreaux (Charreaux (2006). La valeur partenariale: Vers une mesure opérationnelle. Cahier de FARGO no. 1061103, November) measure of stakeholders' value, we demonstrate that financials come to present the weakest stakeholders' value and clients monopolises in term of value acquisition due to a weak ability of negotiation of firms. On the other hand, we construct a regression model of Pulic's value added intellectual capital investment (VAIC) as the measure of the value added from intellectual capital, in market valuation and financial performance. Our results stressed the fact that there is a positive impact of intellectual capital by human capital efficiency and capital employed efficiency on improving firm's market value. Nevertheless, financial performance measured by ROA is still justified by the traditional measure relying on capital employed efficiency. Indeed for Tunisian quoted firms, human capital investment is a pilar for ameliorating firm market valuation of financial performance.

The primary aim of this study is to determine critical factors of knowledge management (KM) and to measure their effect on organisational performance. The design of the study is based on a survey composed of questions related to the KM processes. Following refinement and retesting the initial questionnaire development, the final questionnaire was subjected to 83 managers from various ranks based on personal interviews. The variance-based structural equation modelling reveals that there is a strong positive relationship between KM implementation and non-financial performance, while there is no significant influence of KM implementation on financial performance. With only a mediating effect of non-financial performance, the KM implementation has a strong positive impact on financial performance. This study presents uniqueness in that it is the first and foremost one that analyses effects of KM practices on financial performance both directly and indirectly via the mediating effect of non-financial performance factors.

The objective of this study is to explore the empirical structural links among intellectual capital (IC), innovation and firm’s financial performance, furthermore, the impact of IC and innovation on firm’s financial performance has also been measured. Value added intellectual coefficient model (VAIC) has been used for the measurement of IC. Innovation is measured through research and development (R&D), products development and products in pipeline, whereas, financial performance is measured through traditional financial measures such as return on assets (ROA), return on equity (ROE), earnings per share (EPS), assets turnover ratio (ATO) and market-to-book ratio (MB). The study was based on secondary data, and it has been collected from the published annual reports of listed pharmaceutical firms in London Stock Exchange. The research was carried for the three year period of 2012–2014 and our sample consists of 207 firm-year observations. Structural Equation Modelling (SEM) technique is used to address cause–effect relationships among endogenous and exogenous constructs. Empirical results of SEM analysis support that IC and its components have positive and significant impact on innovation and firms’ financial performance. Moreover, innovation also has significant impact on firms’ financial performance. The study is valuable for the manager, decision makers and policy makers to recognise the value of IC and its philosophy to obtain and sustain competitive advantage through innovation.

The aim of this study was to investigate how combining internal and external knowledge sources (KS) may influence product and process innovation of small and medium enterprises (SMEs) from developing economies in order to improve their financial performances (FPs). Previous research mostly supported that internal KS influence innovation directly as well as indirectly, moderating the relationship between external KS and innovation performance (IP), with this moderation being more prominent in the case of high-technology firms. These studies also supported that innovation influences FP more strongly in this type of firm. The present study proposes that, in developing countries, the opposite occurs. The moderation relationship of internal KS on the relationship between external KS and IP would be stronger in low-technology firms, as well as the positive effect of innovation on FP. We tested our propositions using a sample of 1551 Brazilian manufacturing SMEs controlling by the technological intensity of the industry and confirmed a good part of the proposed hypotheses.

Cryptocurrencies, such as Bitcoin, are a highly volatile asset class where very high returns are offset by large losses. This study examines the financial success of individual investments in cryptocurrencies and analyzes whether it relates to similar explanatory factors as for investments in other asset classes. For this purpose, a nationally representative survey data set of 3,864 German citizens is used, of which 354 (9.2%) reported owning cryptocurrencies in March 2019. We analyze the subpopulation of 225 cryptocurrency owners who classify as investors. 56% of them experienced positive returns, while 29% had negative results. The remaining respondents broke even. The average investment was €1,773 in a portfolio of two cryptocurrencies. At the time of the survey, the average portfolio value had risen to €7094 — an average gain of 300%. While nearly half of the investors (44%) outperformed Bitcoin market returns, not a single one of the early investors (2009–2012) did. We find that net income, the degree of cryptocurrency knowledge and the degree of ideological motivation for owning cryptocurrency have positive effects on returns. This first scientific analysis of individual investment in cryptocurrencies provides a basis for future research and for regulatory decision-making.

Innovative firms are threatened by price-based generic competition, particularly following patent expiration. To combat the so-called “patent cliff” that occurs at patent expiry, some firms are turning to a strategic approach known as value transference. This integrative intellectual property strategy involves transferring the value of a limited life right, such as from a patented invention, to other forms of intellectual property rights, like trademarks. If utilized appropriately, these trademarks can preserve this value indefinitely. The theoretical considerations in my study suggest that an integrated intellectual property rights strategy can enhance financial performance following generic entry. With this paper, I derive propositions to model this effect of strategic intellectual property rights integration. Further, my model extends the analysis of value transference to successor products. It indicates that expanding intellectual property integration strategies beyond its original boundaries to successor offerings amplifies this positive effect. Further, time is identified as imperative for successful intellectual property integration.

Our paper draws upon the literature of corporate financial performance and ethical decision-making to examine how corporate past profits and individual characteristics work together to influence corporate philanthropy. We refute the mediation model in the literature and propose the moderation model instead. Our analysis shows that firms’ prior financial performance is a critical determinant of corporate giving. Furthermore, being a male entrepreneur strengthens the positive relationship between firms’ past profits and corporate giving, whereas education weakens such relationship. Our study advances the research of corporate philanthropy and ethical decision-making as well.

Informal entrepreneurship is a persistent and extensive phenomenon in both developed and developing countries and considerable efforts have been made to understand it from an ecosystem perspective. Nevertheless, literature that analyzes networks within and among individuals in the informal economic sector has received less attention. This study presents an interesting extension of Granovetter's “strength of weak ties” hypothesis. Until now, strong ties are perceived to be constraining and less beneficial than weak ties for the entrepreneurial activity. However, this paper critically examines this assumption in the context of informal entrepreneurship to explore in detail this networking dynamic and how it affects their financial and social performance. A qualitative approach using 50 face-to-face interviews in Mexico was conducted. Our findings demonstrate that strong ties provide the resources, support and information informal entrepreneurs need to reduce their adversity and vulnerable conditions, having a positive impact on their financial and social outcomes.

Synopsis

The research problem

This study examines the relationship between carbon management system quality and firm performance and investigates the mechanisms through which a carbon management system relates to firm performance.

Motivation or theoretical reasoning

Despite growing attention from academia and practice on carbon accounting in recent years, little is known about firms’ strategic implementation of carbon management systems and their impact on firms’ financial outcomes. Drawing on the resource-based view and institutional theory, this study argues that carbon management system implementation can create competitive advantages for firms through product differentiation and cost leadership. However, adopting quality management systems for carbon mitigation can be costly for firms. Additionally, not all firms would achieve such a differentiation advantage through a carbon management system.

The test hypotheses

H₁: There is no relationship between the quality of a carbon management system and firm financial performance.

H₂: Carbon-intensive sectors have no moderating effect on the relationship between the quality of a carbon management system and firm financial performance.

Target population

Corporate managers and stakeholders including investors, international regulators, and standard settees.

Adopted methodology

Ordinary least square regressions.

Analyses

Corporate financial performance is measured by return on assets, calculated as earnings before extraordinary items divided by total assets at fiscal year-end. Our independent variable of interest is the quality measure of a carbon management system (QCMS). Following Tang and Luo (2014) and Luo and Tang (2016), QCMS is calculated as the average equal weighted sum of the standardized values from the 10 elements of a carbon management system. For additional tests, alternative performance measures (e.g., Tobin’s Q, return on equity, operating return on assets [ROA], and cash flow from operating activities to total assets) and disaggregated ROA components are employed as dependent variables.

Findings

We find that a firm’s carbon management system quality is positively associated with its financial performance. A better-quality carbon management system is especially associated with higher revenues, margins, and R&D expenditures. In addition, individual carbon management system components exhibit heterogeneous influences on financial performance. Specifically, the areas related to carbon disclosure and external carbon assurance have an incremental impact on financial performance. The positive association between a carbon management system and financial performance is stronger for firms operating in carbon-intensive sectors and firms with a higher level of carbon emissions. The carbon regulation affects the sensitivity of financial performance differently in intensive and non-intensive sectors in response to carbon management system quality.

In this study, we address the effect of innovation strategy and an innovative working climate on financial performance in the Norwegian wood industry. Innovation strategy embodies four dimensions: the degrees to which innovation in the form of products, processes, and business systems are embedded in the management values and priorities as well as the degree of expenditure in R&D. An innovative working climate is exemplified by team cohesion, supervisory encouragement, resources, autonomy, challenge, and openness to innovation. Previous studies have indicated a lack of research in traditional manufacturing firms on both innovation strategy and a supportive working climate. Our survey was answered by 241 CEOs. The connectional model was tested with structural equation modelling, and all hypotheses received support. This result implied that innovation strategy and an innovative working climate enhanced financial performance in traditional manufacturing firms.

The focus of this paper is on exploring linkages among Open Innovation practices and firm performance. While, in the last ten years, a certain amount of papers facing such issue has been published, most of them treat inbound, outbound, and coupled innovation practice processes separately respect to different dimensions of innovation and financial performance. We argue that the concurrent influence of specific Open Innovation practices on both innovation and economic-financial firms' performance has not been investigated so far into the literature and it is of primary managerial importance. We empirically test our framework on a sample of 105 companies listed on the Industrial Machinery and Component index of NASDAQ.