The Importance of the Integrative Relationship Between Cause and Effect Analysis and The Sustainable Balanced Scorecard in Solving Problems of Economic Units

The aim of the research is to highlight the complementarity between cause-and-effect analysis and the Sustainable Balanced Tag Card. The problem with the research is that economic units are poorly aware of the theoretical and philosophical foundations of cause-and-effect analysis and their importance in costing and solving administrative problems and inadequate attention to financial and non-financial measures. In order to achieve the objective of research and test its hypotheses, the Wasit Textile and Weaving Plant of the State Company for the Textile and Leather Industries, located in the centre of the Wasit prefecture, has been selected as a centre for research. Its performance has been evaluated and a model has been presented to solve the problems it faces through a cause-and-effect analysis scheme with a sustainable balanced tag card (SBSC) that details all environmental and social aspects, both quantitative and financial. A set of conclusions has been reached, the most important of which is that the cause-and-effect relationship is not just a correlation, but a reasonable relationship between the level of the activity and its costs, because it gives analysts and managers confidence in the relationships repeatedly estimated in other sets of data, The identification of cost guides gives managers a vision of several methods they use to reduce costs and the quantity of routers, and the sustainable balanced labeling card uses both financial and non-financial performance measures to bridge the gap arising from the use of financial measures only, as well as to measure and improve performance , The economic unit wishing to take advantage of the characteristics of the adopted economic unit strategies that are relevant to each dimension of the sustainable balance tag and its drawbacks should be careful not to reduce the costs of products or services on an ongoing basis, and focus not only on reducing costs, but also on providing distinct products and services that meet

The Relationship between ESG and Financial Performance Indicators in the Public Sector: Empirical Evidence from the Republic of Serbia

Research Question: This paper investigated whether a relationship exists between environmental, social and corporate governance (ESG) performance indicators and financial performance measures in the public sector. Motivation: Performance measurement plays a significant role in public management and public policy and could be considered to be a segment of the whole performance management process. Growing awareness of climate change, human capital and corporate governance issues have imposed the necessity of introducing environmental, social and corporate governance performance indicators (ESG) in public enterprises’ annual reports. ESG performance indicators encourage investors to make socially responsible investment decisions (De Lucia, Pazienza & Bartlett, 2020). Hence, the paper is focused on the specifics of measuring performance in the public sector. Besides, it is very interesting to acquire knowledge about the correlation between ESG indicators and financial performance measures (Kalaitzoglou, Pan & Niklewski, 2020; Landau, Rochell, Klein & Zwergel, 2020). Idea: The purpose of the research is to highlight relevant performance measures in the public enterprises in the energy sector in the Republic of Serbia and to examine whether the application of the ESG indicators implies better financial performance. Data: Four large Serbian companies in the energy sector were analysed. Data were collected on the web site of the Agency for Business Registers of the Republic of Serbia. The observation period is from 2017 to 2019. The financial performance indicators are ROA, ROE and the economy ratio. Tools: Based on annual financial statements, non-financial reporting of public companies is monitored, whether companies invest in environmental and social protection, as well as whether they implement activities directed to more consistent implementation of corporate governance. The dynamics of selected financial indicators is analysed according to base and chain indices. Findings: The results show that the public enterprises in the energy sector of the Republic of Serbia mainly report on traditional financial measures in their annual financial statements. One of them applies all ESG indicators and the others do it partially. However, no direct and positive correlation between ESG indicators and financial performance measures could be found. Conversely, there is the case that ESG indicators have no linkage with the financial performance measures. Contribution: This paper contributes to the existing literature in the field of public enterprises’ sustainability.

Determinants of Financial Performance of Insurance Companies: Empirical Evidence Using Kenyan Data

The drivers of financial success of the insurance industry are of interest to several players in any economy including the government; policymakers; policyholders; and investors. In Kenya; there have been relatively few studies on this topic; most of which look at narrow elements that determine insurance companies’ performance. This article sought to explore the components contributing to the financial performance of insurance firms. We employed a sample consisting of 37 general insurers and 16 life insurers for the period running from 2009 to 2018 and utilised panel data methods in order to establish the determinants of financial performance of Kenyan insurers. The pooled OLS; fixed effects and random effects models were estimated with the financial performance measures (proxied by either ROA or ROE) as the dependent variables. The results of the study documented that insurer financial performance and size were positively related. The study also found that insurer financial performance was negatively related to the age variable. The study also unraveled that higher leveraged insurance companies performed better than their lowly geared peers. This article provides broad analyses of the various drivers of financial performance of the insurance industry in Kenya. The findings of this study contribute to the academic literature on the financial performance of the insurance sector in Kenya and Africa as a whole. Furthermore; it gives pointers to the management of insurance companies on the aspects of their business that would need greater attention to drive and sustain superior financial performance.

Non-financial performance measures and pay-performance sensitivity

Purpose This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in incentive contracts. Design/methodology/approach Using hand-collected performance measure data in a sample of S&P 500 firms across the period 1994–2010, this study investigates the sensitivity of CEO bonus and cash pay to shareholder wealth of firms that use non-financial performance (NFPM) measures of varying types and contractual weights in their bonus contracts along with financial measures (NFPM firms) in comparison to that of firms using financial measures only (FPM firms). Findings This study finds evidence that the pay-performance sensitivity is stronger in NFPM firms than in FPM firms. These results are driven by the use of CEO individual goals and operational efficiency. Furthermore, when using environmental, social and governance factors, the pay-performance sensitivity is stronger in terms of accounting performance only. This study also finds that using NFPM enhances pay-performance sensitivity more as their contractual weights increase and as financial risk increases. Practical implications These findings are important to stakeholders, and especially regulators in understanding incentive effects of alternative performance measures. This study also sheds light on what types of non-financial measures are better in helping firms align CEOs’ incentives to shareholders’ interests. Originality/value This study contributes to prior research on benefits of non-financial information within the context of executive compensation. This study presents original results about the effects of contractual weights of non-financial measures and financial risk on CEO pay-performance sensitivity. This study also presents new insights regarding how different types of non-financial measures affect CEO pay-performance sensitivity.

Pengaruh Implementasi Good Corporate Governance terhadap Kinerja Perusahaan Perbankan Umum Go Public pada Masa Krisis Ekonomi Global di Indonesia

<p class="pre" align="justify"><em>This research uses normality test, classic assumption test and multiple regression analysis method which aims to see the effect of the implementation of Good Corporate Governance (with indicators of the board of commissioners, audit committee and institutional ownership) on open public banking with indicators of Non Performance Loan (NPL), Loan to Deposit Ratio (LDR) and Capital Risk (CAR) during the global economic crisis in Indonesia. Research samples from publicly listed banking companies on the Indonesia Stock Exchange (IDX) and must have the research criteria. It is known that there are 45 banking companies that are active until the end of 2019 on the Indonesia Stock Exchange (IDX), but according to the research criteria there are only 25 banking companies with 2-year observation, year2018-2019, so the number of observation samples used is 50 samples. Based on the results of the research, it is realized that the implementation of Good Corporate Governance (GCG) has no effect on banking performance with financial performance measures, namely Non Performance Loans (NPL) and Loan to Deposit Ratio (LDR) in go public banks during the global economic crisis in Indonesia, but the results Hypothesis testing shows that the implementation of Good Corporate Governance (GCG) has a positive effect on the Capital Risk (CAR) variable in publicly traded commercial banks so that it is accepted because the implementation of Good Corporate Governance (GCG) will increase the supervision of the implementation of capital adequacy regulations set by the gover</em><em>nment.</em><em></em></p>

Disclosure of Sustainability Report on Financial Performance

The increasing number of companies that publish sustainability reports in Indonesia has led to an increasing trend of research on the relationship between sustainability reports and financial performance. However, the results of these studies are still inconsistent. Re-examining the relationship between the sustainability report disclosure and financial performance is the aim of this study. Two things that make this study different from the previous one, the first study uses companies that consistently report sustainability reports, and the second, use financial performance measures, profitability. The sample used was 33 observations from companies that consistently reported sustainability reports during the 2017-2019 period. The test results show that the social dimension (SO) of the sustainability report has no effect on financial performance, while the other two dimensions, namely the environment (EN) and the Economy (EC), have a positive effect on financial performance.

Subsidiary banks in emerging markets: how strong is the coordination on a group-wide basis?

PurposeThe parent-subsidiary nexus has been explored since the mid-1990s, but the extent to which subsidiaries resemble their parents remains unclear. Therefore, this study examines the performance drivers for subsidiary banks in emerging markets and their parents to determine the similarities between these groups. The findings could help identify key financial performance measures that should be included in global strategies for multinational banks operating in emerging markets.Design/methodology/approachThe study uses data on subsidiaries from 32 countries, including 20 European transitioning countries and 49 parent companies operating internationally from 1996 to 2015. It considers several models that distinguish between units using individual bank effects and the stochastic structure. In a robustness analysis, EU- and non-EU-based institutions are distinguished and long-term historical links between parents' and subsidiaries' countries are considered.FindingsCost control, capital adequacy and asset quality policies have similar importance for parent banks and subsidiaries and are strictly coordinated, whereas the remaining policies allow more flexibility. Subsidiaries in the EU and in countries that were politically and/or militarily influenced by parent countries do not “fall far from the tree”, which signals their strong group-wide integration and coordination.Research limitations/implicationsThis study covers a limited number of emerging market countries due to the limited availability of long-term series data. Future studies should include more countries.Originality/valueThis study identifies key financial measures used on a group-wide basis for performance management while accounting for long-term relations between host and home countries and the geopolitical characteristics of host countries.

A systematic literature review regarding the influence of lean manufacturing on firms' financial performance

PurposeThe lean philosophy has demonstrated its effectiveness to improve firms' operational performance. However, the impact of lean practices on financial performance is still unclear due to the poor understanding of the link between operational and financial measures and the conflictive results obtained by previous research. The purpose of this paper is to conduct a systematic literature review to understand whether lean companies have improved their financial performance. Moreover, this article aims to uncover research gaps in the literature and examine which time spans of research have been considered to analyse both the degree of lean implementation and the measurement of financial outcomes.Design/methodology/approachA systematic literature review has been conducted to identify peer-reviewed articles that analyse the effect of the lean production paradigm on the financial performance measures of manufacturing companies. Then, the identified articles were processed using a combination of descriptive and content analyses methods to draw new conclusions, uncover gaps and find novel paths for research.FindingsVarious authors indicate that lean initiatives lead to an enhancement of financial performance measures. JIT and TQM lean practice bundles are suggested as the best enablers of financial performance in terms of sales and profit. In contrast, according to some scholars, lean does not necessarily improve companies' financial results if it is not properly implemented.Originality/valueSeveral studies have focused on analysing the effects of lean on performance. However, only a small part of the literature has addressed the study of the effects of lean practices on financial performance metrics. The originality of this study lies in the investigation of the connections between lean practices and financial performance measures found in the literature. The outcome is the identification of various possible positive impacts of some lean practices on financial metrics.

Organisational performance and the use of multiple performance measures in an emerging market

PurposeThis study is an empirical investigation of the relationship between the use of 41 multiple performance measures (MPMs), including financial performance measures (FPM), non-financial performance measures (NFPMs) and organisational performance (OP) in Libya.Design/methodology/approachThe results are based on cross-sectional questionnaire survey data from 132 Libyan companies (response rate 61%), which were obtained just before the so-called Arab Spring.FindingsMPMs are used by both manufacturing and non-manufacturing companies. Libyan business organisations are more likely to use FPMs than NFPMs. However, these companies still rely more heavily on FPMs. The relationships between the use of NFPMs and OP and the use of MPMs and OP are positive and highly significant. The relationship between the use of FPMs and OP is positive but not significant.Research limitations/implicationsThe high power distance associated with the conservative, Libyan, Arab context will reinforce the tendency to use FPMs more than NFPMs. This may provide a performance advantage to those organisations which do adopt NFPMs.Practical implicationsAlthough there may be institutional barriers to the use of NFPMs in Libya, and other emerging markets, these are not insuperable and there is a payoff to their use.Originality/valueNo previous studies of emerging markets, such as the Middle East or North Africa, have looked at the relationship between OP and the adoption of such a large array of MPMs.

Performance measurement and NPOs' effectiveness: does internal stakeholders' trust matter? Evidence from Palestine

PurposeThis study proposes a model of the effect of financial and non-financial performance measures on nonprofit organizations’ (NPOs’) effectiveness where internal stakeholders' trust play an intervening role in the aforementioned relationships.Design/methodology/approachData were collected from 218 employees working at the largest Palestinian NPOs. The perceptions of these employees were used to measure the variables, and structural equation modeling was used to examine the hypotheses.FindingsResults suggest that the use of financial and non-financial performance measures was positively related to NPOs' effectiveness. Internal stakeholders' trust showed a significant mediating effect between the use of performance measures and NPOs' effectiveness.Practical implicationsThis study may be of value for NPOs' managers due to the positive effects performance measurement (PM) can have on NPO effectiveness. Managers and boards should seek to enhance their internal stakeholders' trust to achieve higher levels of effectiveness.Originality/valueThis study has three main contributions. First, it is one of the very few papers which empirically examines the links between PM and NPOs' effectiveness, rather than providing conceptual lens. Second, the paper investigates the role of stakeholders' trust as a mediating mechanism in the proposed model, a topic that has been neglected by NPOs governance researchers. Finally, the study uses data from the Palestinian context, contributing to the PM literature by providing evidence on the relationship between performance measures and NPOs' effectiveness from a non-Western context.