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Article
Publication date: 6 September 2019

B. Rajesh Kumar, K.S. Sujit and Waheed Kareem Abdul

The purpose of this study is to broadly examine the role of marketing–finance interface factors for value creation. Specifically, the study investigates the influence of…

1205

Abstract

Purpose

The purpose of this study is to broadly examine the role of marketing–finance interface factors for value creation. Specifically, the study investigates the influence of discretionary expenditures such as advertisement on valuation of brands and firms within the framework of risk factors.

Design/methodology/approach

To test the model and hypotheses of this study as it has the possibilities of multiple causations among different variables used in the system. Some independent variables are not truly independent and there is a possibility of biased estimation and inconsistent results. Hence a dynamic simultaneous equation model is used including the instrumental variable approach.

Findings

The study provides evidence for direct association between brand value and firm value which is represented by the joint impact of both operating and stock market performance. The results establish the direct relationship between brand and firm value and signify the relevance of intangible value creation.

Originality/value

This study addresses the gap in the research which examines the role of marketing decisions on value creation which jointly impacts both operating and stock market performance.

Details

Measuring Business Excellence, vol. 24 no. 1
Type: Research Article
ISSN: 1368-3047

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Article
Publication date: 3 April 2018

Mukesh Kumar, K.S. Sujit and Vincent Charles

The purpose of this paper is to propose the microeconomics concept of elasticity to estimate the SERVQUAL gap elasticity to derive important insights for service providers to…

996

Abstract

Purpose

The purpose of this paper is to propose the microeconomics concept of elasticity to estimate the SERVQUAL gap elasticity to derive important insights for service providers to develop the right strategies to bridge the overall gap in service.

Design/methodology/approach

The dimensions of SERVQUAL adopted from Parasuraman et al. (1988) and Kumar et al. (2009) are first verified for their unidimensionality using structural equation modeling and reliability in the context of United Arab Emirates banking industry. Furthermore, the technique of dominance analysis is used to derive the relative importance of dimensions for different groups of banks. Finally, the stepwise log-linear regression models are used to estimate the gap elasticity to measure the responsiveness of the overall SERVQUAL gap to a change in customers’ perception on different dimension.

Findings

The results reveal that the dimension which is prioritized as the most important dimension need not to be the one to be targeted under the resource constraint to react faster to the changes of customers’ banking behavior.

Originality/value

This is probably the first attempt to examine the service quality through gap elasticity. This method is especially useful when the traditional approach to measure relative importance of critical factors fails to clearly discriminate between two or more dimensions, which, in turn, may lead to failure in decision making to choose the right strategies to bridge the overall gap in the service.

Details

International Journal of Quality & Reliability Management, vol. 35 no. 4
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 30 August 2024

Rajesh Kumar Bhaskaran, Sujit K Sukumaran and Kareem Abdul Waheed

This study aims to examine whether social initiatives adopted by firms lead to improved financial performance. The authors analyse the impact of different elements of social…

79

Abstract

Purpose

This study aims to examine whether social initiatives adopted by firms lead to improved financial performance. The authors analyse the impact of different elements of social initiatives on wealth creation for firms in terms of operating and market performance.

Design/methodology/approach

The study is based on the social initiative scores of over 4,500 firms collected from Thomson Reuters' ESG database. The study uses two-stage least squares (2SLS) to analyse the relationship between social initiatives and firm performance.

Findings

Profitable, mature, capital intensive and firms with high sales growth rate tend to invest more in social initiatives. Firms with high agency costs invest in social initiatives for workforce efficiency, maintaining human rights and product responsibility. The study documents evidence that social investments are value creating mechanism for firms which leads to improved financial performance in terms of operating and stock market performance. Firms with high dividend intensity invest in social initiatives for workforce welfare and human rights initiatives. Investment in employee well-being and community initiatives results in intangible benefits such as improved stock market valuation.

Practical implications

The research model has not considered the impact of intervening variables to understand the relationship between corporate social performance and corporate financial performance.

Social implications

Firms ought to recognize that social investment is beneficial in terms of value creation of firms as stock market perceive such investments favourably. Firms must focus more on community development initiatives and workforce initiatives for the value creation of firms compared to investments directed towards human rights initiatives and product responsibility initiatives.

Originality/value

This study focusses exclusively on the social dimension of the CSR activities. The authors examine the impact of social welfare scores on firm performance by analysing the valuation effects on scores representing workforce, human rights, community and product responsibility. Moreover, the paper also examines the impact of a new dimension of product responsibility on firm performance. They also focus on both aspects of financial performance in terms of operating performance (proxied by ROE) and the joint impact of both operating and market performance (proxied by Tobin’s Q). This paper contributes to the research on the linkage of social performance to financial performance by observing that firms with high agency cost characteristics tend to invest in social initiatives for work force efficiency, maintaining human rights and product responsibility.

Details

Journal of Global Responsibility, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2041-2568

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Article
Publication date: 17 August 2018

Narinder Pal Singh and Sugandha Sharma

The purpose of this paper is to investigate the dynamic relationship among Gold, Crude oil, Indian Rupee-US Dollar and Stock market-Sensex (gold, oil, dollar and stock market…

545

Abstract

Purpose

The purpose of this paper is to investigate the dynamic relationship among Gold, Crude oil, Indian Rupee-US Dollar and Stock market-Sensex (gold, oil, dollar and stock market (GODS)) in the pre-crisis, the crisis and the post-crisis periods in the Indian context.

Design/methodology/approach

The authors use Johansen’s cointegration technique, Vector Error Correction Model (VECM), Vector Auto Regression, VEC Granger Causality/Block Exogeneity Wald Test, and Granger Causality and Toda Yamamoto modified Granger causality to study long-run relationship and causality.

Findings

Johansen’s cointegration test results indicate that there is a long-run equilibrium relationship among the variables in the pre-crisis and the crisis periods but not in post-crisis period. VECM results report that none of four models of the variables show long-run causality in the pre-crisis period. During the crisis period, both crude oil and Sensex models show long-run causality. However, in some cases, results indicate short-run causality. The authors find one-way causality from USD and Sensex to crude oil, and from gold and Sensex to USD. Thus, the authors conclude that the relationship among GODS is dynamic across global financial crisis.

Practical implications

The research findings of this study are vital to the large group of stakeholders and participants of gold, crude oil, US dollar and stock market in emerging economies like India. The results are useful to importers, exporters, government, policy makers, corporate houses, retail investors, portfolio managers, commodity traders, treasury and fund managers, other commercial traders, etc.

Originality/value

This study is one of its kinds as it investigates the relationship among GODS in India in different sub-periods like before, during and after the global financial crisis of 2008. None of the studies compare phase-wise relationship among GODS in the Indian context. The study contributes to the economic theory and the body of knowledge. It highlights the need to revisit the economic theory to explain the interplay mechanism among GODS.

Details

Journal of Advances in Management Research, vol. 15 no. 4
Type: Research Article
ISSN: 0972-7981

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Article
Publication date: 29 June 2021

Rajesh Kumar Bhaskaran, K.S. Sujit and Saksham Mongia

This research study examines the impact of social and governance initiatives on financial performance of global banks. The study is significant in the context of massive changes…

2255

Abstract

Purpose

This research study examines the impact of social and governance initiatives on financial performance of global banks. The study is significant in the context of massive changes in regulations, government policy, social attitudes and market development attributed to banking sector.

Design/methodology/approach

The source of data for this study was ESG database of Thomson Reuters. The study was based on 472 global banks. The research paper uses two-stage least square model and the study covered the five-year period 2015–2019.

Findings

Banks with high intensity of social and governance-related activities have positive market-based valuation effects. Adequately capitalized banks tend to invest more in social initiatives. Banks' governance initiatives directed toward the use of anti-takeover defensive mechanisms are skeptically perceived by markets. Riskier banks tend to have less investments in social initiatives.

Research limitations/implications

The findings are relevant in the context of expectations from policymakers, consumers and investors with respect to the role which banks ought to play in funding the development of a sustainable economy. The research finding that strong governance and social initiatives by banks are value-enhancing measures is a clear evidence of the significance of ESG initiatives as value-creating mechanisms as perceived by markets.

Originality/value

This study addresses the gap in the research, which examines the role of governance and social initiatives on value creation in the banking sector firms. The study examines the impact of different elements of governance and social initiatives on financial performance of banks.

Details

International Journal of Productivity and Performance Management, vol. 72 no. 1
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 16 May 2023

Ravinder Singh, C.P. Gupta and Pankaj Chaudhary

The purpose of this paper is to investigate the relationship between dividend policy and the life cycle of firms in India. In addition, this study intends to examine the variation…

604

Abstract

Purpose

The purpose of this paper is to investigate the relationship between dividend policy and the life cycle of firms in India. In addition, this study intends to examine the variation in dividend behaviour over the life cycle of a firm. The study anticipates that a firm's dividend behaviour varies over its life cycle.

Design/methodology/approach

To scrutinize the validity of the proposition, the authors classify 1968 non-financial industrial firms listed at Bombay Stock Exchange (BSE) into growth, mature and stagnant firms over the period 2000–20. Additionally, to check the robustness of the results, they use an array of techniques such as analysis of variance, pooled ordinary least squares, fixed effects models and random effects models.

Findings

The empirical findings suggest that dividend behaviour varies over a firm's life cycle. Specifically, stagnant firms are paying significantly higher dividends than growth firms. Mature firms are paying significantly higher dividends than growth firms. The results are consistent after controlling the effects of firm's size, profitability, leverage, operating risk, systematic risk and growth opportunities.

Research limitations/implications

The findings are useful for corporate decision makers in establishing an appropriate dividend policy conditional on firms' life cycle stage and for shareholders in making investment decisions.

Originality/value

The relation between dividend policy and firm life cycle has not been examined before in the context of Indian stock market. Thus, this research bridges this gap in the literature.

Details

Managerial Finance, vol. 49 no. 11
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 26 May 2022

Geetanjali Pinto and Shailesh Rastogi

This study aims to evaluate the influence of corporate governance index (CGI), ownership concentration (OC) and other features on the dividends of listed Indian pharmaceutical…

622

Abstract

Purpose

This study aims to evaluate the influence of corporate governance index (CGI), ownership concentration (OC) and other features on the dividends of listed Indian pharmaceutical companies. The other features included are leverage, excess return over cost of equity and stock-market return. This study thus helps to provide more insights on the dividend distribution issues for a shareholder in the challenging and demanding pharma industry, especially when stakes are high.

Design/methodology/approach

The data for all 26 pharmaceutical companies which form part of the NSE NIFTY-500 index for six years (2014–2019) is procured using Centre for Monitoring Indian Economy’s (CMIEs) Prowess database. An eight-pointer scale (unweighted scale) is used to develop the CGI. For OC, this paper considers the proportion of promoters’ shareholding, domestic institutional investors’ shareholding and foreign owners’ shareholding. Both static and dynamic panel data models are used to evaluate the effect of CGI and OC on dividends.

Findings

The panel data analysis depicts that CGI significantly positively influences the dividends of pharmaceutical companies in India. Thus, the authors find support for La Porta et al.’s outcome agency model. The results also reveal that only promoters’ holdings are significantly inversely related to dividends out of the three OC variables used for this study. This discussion implies that family-run pharmaceutical companies in India tend to retain profits instead of distributing dividends.

Research limitations/implications

This study provides two direct insights for policymakers and stakeholders. First, because this study shows that CGI significantly positively influences dividends, corporate governance (CG) is an essential factor for determining dividends. Second, because the results also reveal that OC in the hands of promoters hurts dividends, it implies that the higher the promoter holding, lesser is the dividend distributed by the company. Both these results can be used as a quantitative tool by investors to assess Indian pharmaceutical companies better. However, a similar study could be directed to assess the impact of CGI and OC on dividends of other industries. Moreover, additional variables of CG and OC can also be evaluated in further detail. There is also a need to empirically validate the impact of CG and OC on a company’s performance.

Originality/value

The results are robust and reveal that variation in CGI does impact dividend policy. This aids in confirming that CG is a crucial aspect influencing dividends. The findings also add to the increasing studies across the globe evaluating the influence of CG and OC on dividends.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 7
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 4 July 2023

Neeraj Jain and Smita Kashiramka

This study aims to investigate the effects of peers on corporate payout policies in one of the largest emerging markets – India. It also examines the motives for mimicking payout…

417

Abstract

Purpose

This study aims to investigate the effects of peers on corporate payout policies in one of the largest emerging markets – India. It also examines the motives for mimicking payout decisions.

Design/methodology/approach

The sample is composed of 3,024 non-financial and non-government firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for the period 1995 to 2020. To encounter the endogeneity problem, the instrumental variable technique based on peer firms' idiosyncratic risk is used to estimate the effects of peers on firms' payout policy. To define peer reference groups, the authors use the basic industry classification of the firms.

Findings

The results indicate a significant positive impact of peers on firms' dividend policies in India. A firm with all dividend-paying peers is more likely to declare dividends than the one with no dividend-paying peers. Further, peer effects are found to be more pronounced amongst larger and older firms, thus supporting the rivalry theory of mimicking.

Originality/value

To the best of the authors' knowledge, the present study is the first of its kind that attempts to understand peer effects on payout decisions in an emerging market India, that offers a unique institutional setting. Moreover, the authors extend the existing literature by investigating the peer effects on a firm's payout policies considering various firm-level characteristics, such as growth opportunity, cash holding, financial constraint and profitability, which previous studies have not taken into consideration. These results provide additional insights into the heterogeneity and motives behind peer effects.

Details

International Journal of Managerial Finance, vol. 20 no. 2
Type: Research Article
ISSN: 1743-9132

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Book part
Publication date: 30 January 2023

Raktim Ghosh and Bhaskar Bagchi

Abstract

Details

Economic Policy Uncertainty and the Indian Economy
Type: Book
ISBN: 978-1-80455-937-6

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Article
Publication date: 29 April 2019

Omar Farooq and Khondker Aktaruzzaman

Is location in the financial center of a country significant determinant of a firm’s dividend policy? The purpose of this paper is to answer this question within the context of an…

688

Abstract

Purpose

Is location in the financial center of a country significant determinant of a firm’s dividend policy? The purpose of this paper is to answer this question within the context of an emerging market.

Design/methodology/approach

The authors use variety of techniques (OLS regression, panel regression with random effects, TOBIT regression and quintile regression) to document the effect of location on dividend policies of Indian firms during the period between 2001 and 2016.

Findings

The results show significantly higher dividend payout ratios for firms headquartered in Mumbai, the main financial center of India. The results are robust for alternate proxy of dividend policy and for different sub-samples. The results also show that these results are more pronounced for firms with better information environment (firms with high analyst coverage).

Originality/value

To the best of the authors’ knowledge, most of the prior research overlooks how a location of firm’s headquarter in the financial center affects its dividend decisions. This paper fills this gap by documenting the relationship between the two in India.

Details

Management Decision, vol. 58 no. 6
Type: Research Article
ISSN: 0025-1747

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