Do disclosure and transparency affect bank’s financial performance?

an article by Isaiah Oino (Coventry University, UK) published in Corporate Governance Volume 19 Issue 6 (2019)

Abstract

Purpose
The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios.

Design/methodology/approach
A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution.

Findings
The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309.

Research limitations/implications
This paper did not consider time series because corporate governance does not change periodically.

Practical implications
This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level.

Originality/value
The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

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The relationship between flexible employment arrangements and workplace performance in Great Britain

an article by Eleftherios Giovanis (University of Verona, Italy) published in International Journal of Manpower Volume 39 Issue 1 (2018)

Abstract

Purpose
There is an increasing concern on the quality of jobs and productivity witnessed in the flexible employment arrangements. The purpose of this paper is to examine the relationship between various flexible employment arrangements and the workplace performance.

Design/methodology/approach
Home-based working, teleworking, flexible timing and compressed hours are the main employment types examined using the Workplace Employee Relations Survey (WERS) over the years 2004 and 2011 in Great Britain. The workplace performance is measured by two outcomes – the financial performance and labour productivity. First, the determinants of these flexible employment types are explored. Second, the ordinary least squares (OLS) method is followed. Third, an instrumental variable (IV) approach is applied to account for plausible endogeneity and to estimate the causal effects of flexible employment types on firm performance.

Findings
The findings show a significant and positive relationship between the flexible employment arrangements and the workplace performance. Education, age, wage, quality of relations between managers-employees, years of experience, the area of the market the workplace is operated and the competition are significant factors and are positively associated with the propensity of the implementation of flexible employment arrangements.

Social implications
The insights derived from the study can have various profound policy implications for employees, employers and the society overall, including family-work balance, coping with family demands, improving the firm performance, reducing traffic congestion and stress among others.

Originality/value
It is the first study that explores the relationship between flexible employment types and workplace performance using an IV approach. This allows us to estimate the causal effects of flexible employment types and the possible associated social implications.

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