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Decision Usefulness of Corporate Environmental Reporting and Firm Performance: Evidence from Sri Lanka
--D M M B Dissanayake and E M A S B Ekanayake
The study attempts to assess the degree to which Corporate Environmental Reporting (CER) contributes to firm performance in Sri Lanka. Four qualitative characteristics of financial information as stated in the Conceptual Framework for Financial Reporting (i.e., relevance, faithful representation, understandability and comparability) and three performance indicators (i.e., ROA, ROE and EPS) have been used to measure the decision usefulness of CER information and firm performance, respectively while three variables, namely, growth, firm size and leverage, were controlled in the study. For this purpose, top 30 companies based on the market capitalization in the Colombo Stock Exchange (CSE) of Sri Lanka were selected as the sample. Data were gathered from the annual reports of these companies during the period from 2013 to 2016, and data analysis was carried out using content analysis, descriptive statistics, Pearson correlation coefficient and multiple regression analysis. The findings show that scores for the two fundamental characteristics (i.e., relevance and faithful representation) were relatively lower than those of the enhancing qualitative characteristics (i.e., comparability and understandability), indicating a lower level of decision usefulness. With regard to the association between CER reporting and firm performance, it was evident that there is a positive association between the two variables. The findings of the study have significant policy implications such as the importance of provision of environmental information for decision making purposes rather than merely satisfying the stakeholders of companies.
© 2018 IUP. All Rights Reserved.
The Relationship Between Corporate Environmental Reporting Practices
and Company Characteristics:
Evidence from India
--Mahesh Chand Garg and Sandeep Kumar
This study investigates the extent of environmental information disclosure in the annual reports of companies listed on the stock Dollex-200, and tests whether there is any relationship between the amount of environmental disclosure index and company characteristics such as industry type, age, size, profitability, liquidity and leverage. By using a purposive sampling method, 90 Indian private listed companies were selected as of March 31, 2014. The findings indicate that 62% of the companies have environmental disclosure of 20 to 50% in their annual reports. The results of the study also indicate that industry type and size (total assets, profit after tax and net sales) of the company are positively affected by the extent of environmental information disclosure in annual reports. These results imply that larger companies disclose more environmental information than smaller companies. However, there is no significant relationship between the extent of environmental disclosure and other company characteristics such as market capitalization, age, profitability, liquidity and leverage.
© 2017 IUP. All Rights Reserved.
Microeconomic and Macroeconomic Determinants of Efficiency:
Evidence from Indian Industrial Machinery Sector
--Sumit Kumar Maji
Industrial machinery industry is one of the most important drivers of growth of the manufacturing sector in the Indian economy. The importance of this industry can be understood from the fact that it produces a wide range of machinery that is at the core of other manufacturing industries in India. Moreover, this sector can contribute towards generating foreign earnings and employment. There are 97 listed companies in this segment, which makes this sector highly competitive. Thus, the firms have to be efficient in order to endure in the long run. The present study seeks to evaluate the efficiency of the 43 (44.33%) select industrial machinery firms for the period 2001-02 to 2014-15 with the help of Stochastic Frontier Analysis in the first stage. In the second stage, the determinants (both microeconomic and macroeconomic) of such firm level efficiency are explored using Panel Censored Tobit Regression Model. The results of the study show that leverage, size, openness, age and inflation are the major determinants of the efficiency of the industrial machinery firms operating in India during the period of study.
© 2017 IUP. All Rights Reserved.
Earnings Management Strategies
During Financial Distress
--Neerav Nagar and Kaustav Sen
The paper examines whether financial distress and its severity have a role to play in managers’ decisions with respect to the choice of earnings management strategies. The results suggest that firms in initial stages of distress engage in real earnings management through a reduction in the spending on selling and general and administrative expenses, and through classification shifting to increase profitability and liquidity. When distress becomes severe, firms cut back on production, engage in income-increasing accruals management, and increase their spending on selling and general and administrative expenses. Initial under-spending on selling and general and administrative expenses is opportunistic with an intention to show improved performance. In extreme distress, increase in such spending is a sound economic decision. The findings provide insights into how managers of distressed firms trade off between liquidity, profitability and solvency both in the short run and the long run.
© 2017 IUP. All Rights Reserved.
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