An integrated framework for the financial analysis of sustainability

Castro, Noelia Romero; Chousa, Juan Piñeiro

doi:10.1002/bse.539

Cited by 50 publications

(34 citation statements)

References 16 publications

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“…The aggregate list of ratios/variables could be infinite, but a first analysis is useful to focus on those that are relevant, depending on sector membership and company size; such an analysis should be conducted through a double learning process combining a deductive and inductive approach (placing emphasis on specific data and the application of statistical methods) (Castro and Chousa, 2006).…”

Section: Discussionmentioning

confidence: 99%

“…Financial analysis, using cause-and-effect ratios, provides the most valuable contribution to the processing of data regarding the impact of social practices on stakeholder value (Castro and Chousa, 2006). We are not specifically looking into the "type" of relationship between social and financial performance, but rather we emphasize the worth of statistical analysis and its integration into traditional financial representations.…”

Section: Toward An Integrated Representation Of Social Performance Anmentioning

confidence: 99%

“…Indeed, the vast majority of social investments are not built on statistical relationships (Castro and Chousa, 2006). Castro and Chousa (2006) support the idea that "the ratio or mathematical relationship between two quantities is of paramount importance in financial analysis as it injects a qualitative measurement, precisely demonstrating the adequacy of one key financial statement item as compared against another and providing comparisons between companies in the same industry as well as year-to-year comparisons within a single company".…”

mentioning

confidence: 99%

“…Unfortunately, we are still suffering from a systematic application of statistical analysis and representations, integrated with primary tools of (qualitative and quantitative) financial analysis, due to a lack of awareness of the main principle of cause and effect (Castro and Chousa, 2006). Most analysts have given equal weight and value to all ratios, with no indication of which ratios may be the most important or what positive lessons we learn using different perspectives (a diachronic perspective -trend analysis over time -or a synchronic perspective -benchmarking at a point in time).…”

mentioning

confidence: 99%

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Investigating the Relationship between the Social and Economic-financial Performance

Vaia¹,

Bisogno²,

Tommasetti³

2017

AFA

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Hundreds of studies have explored and measured financial returns related to social performance (Margolis and Walsh, 2003), with controversial results. In addition to these studies" outcomes, we found, in this body of literature, a lot of innovation in the integration and adaptation of financial analysis tools and models to the study of statistical relationships.In this paper, we investigate the relationship between corporate social performance and corporate financial (and economic) performance, using multiple measures of financial and social performance and by looking statistically at the movement of actual financial and social performance over time. We emphasize the worth of statistical analysis in traditional financial representations.Our findings show how ratio analysis and statistical cause-and-effect validation are not alternatives for developing the financial analysis of sustainability and reporting. We show, through constant testing and a double learning process, the critical relationship between the key factors of financial, economic and social performance.

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Section: Discussionmentioning

confidence: 99%

Section: Toward An Integrated Representation Of Social Performance Anmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

See 2 more Smart Citations

Investigating the Relationship between the Social and Economic-financial Performance

Vaia¹,

Bisogno²,

Tommasetti³

2017

AFA

View full text Add to dashboard Cite

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“…As they represent the numeric relationship between two key financial items, financial ratios allow the crosssectional comparison of multiple companies within an industry, as well as longitudinal year-on-year comparisons within an individual company (Castro & Chousa, 2006). Because a ratio measures the magnitude of one financial item in relation to the other, it can be used to determine the dominance of certain organisational activities, actions or elements over others, while controlling for the presence of trends affecting the entire organisation or industry as a whole such as organic growth, crises and business cycles (Altman, 1968;Castro & Chousa, 2006;Van Peursem, Prat, & Lawrence, 1995).…”

Section: Financial Ratios As Constructsmentioning

confidence: 99%

A developmental perspective on business model innovation: exploring sequences of change in high-performing IT firms

Brea¹

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Altering and enhancing existing business models through business model innovation has emerged as a powerful competitive strategy that can provide advantage over extended periods of time.Business model innovation also presents a fundamental counterpart for technological, product and organisational innovations. Success stories of unconventional firms disrupting markets and sustaining financial rewards over competitors through business model innovation can be found in virtually any industry. A key success factor for long-term competitiveness lies in the implementation of multiple, rather than punctual, business model innovations over time, although achieving change through successive iterations is a challenge driven by market and technological dynamics and disruption. However, the lack of empirical investigation on the dynamics of business iii Business model change events are identified through outlier detection and analysis of coordinated changes across the value creation, delivery and capture dimensions of the business models. Data were collected from a large financial database and transformed into individual sequences of change events. A validation procedure assessed the accuracy of the identification process for business model change events through qualitative data and in-depth analysis for four firms in the larger sample. Then, the individual sequences of change events were used as inputs for data mining methods of analyses, complemented by frequency domain analysis and statistical tests, which revealed the patterns of business model development in high-performing firms.The results suggest a significant association between the timing and intensity at which firms change their business models and their average performance over time. The evidence also suggests that business model change is likely to culminate in events where the value delivery dimension is altered. In terms of the frequency and magnitude of changes, high-performing firms are more likely to develop their business models through frequent and incremental alterations over time, except for mature-large firms who, compared to young-small, young-large and mature-small firms, are more likely to implement radical, less frequent changes over time. Both environmental and internal forces influence the intensity at which high-performing firms typically alter their business models, although environmental factors are more significant than internal forces. Both unconscious and deliberated actions influence business model development in high-performing firms. Unconscious actions dictated by the firm's particular characteristics of age, size and sub-industry membership are a more significant influence than deliberated, emergent actions.This research develops the new concept of business model development, and provides a contribution to theory by empirically examining a previously unexplored process. By adopting the process-based approach, this research contributes to new thinking and research in business model innovation centred on analysing the flow of eve...

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The impact of voluntary environmental disclosure on firm value: Does organizational visibility play a mediation role?

Hassan

2018

Bus Strat Env

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The current study investigates whether organizational visibility, that is the extent to which analysts follow, and institutions hold, a firm's stock (Baker, Powell, & Weaver, , p. 47), may explain the mechanism through which corporate environmental disclosure (CED) affects firm value. It explores whether CED impacts organizational visibility, and if so, whether firm value increases in organizational visibility, after accounting for greenhouse gas emissions intensity (GHG) as well as several firm‐level and country‐level controls. It utilizes a sample of S&P Global 1200 companies from 2010 to 2015. Using structural equation modeling to address the complex interrelationships between the variables of interest and employing Full Information Maximum Likelihood regression method, the findings show that organizational visibility does not play a statistically significant mediation role on the relationship between CED and firm value. However, organizational visibility is significantly associated with both CED and firm value, which indicates that failing to control for organizational visibility when examining the relationship between CED and firm value could yield misleading results. The results also show that prior CED significantly reduces current GHG. Interestingly, analyst coverage is found to play a full mediation role on the relationship between institutional ownership and firm value as well as a partial mediation role on the relationship between prior GHG and firm value. Thus, this study suggests that corporate management lobby financial analysts and educate them about their firms' environmental disclosure and performance to improve their information set and increase firm visibility and value.

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An integrated framework for the financial analysis of sustainability

Cited by 50 publications

References 16 publications

Investigating the Relationship between the Social and Economic-financial Performance

Investigating the Relationship between the Social and Economic-financial Performance

A developmental perspective on business model innovation: exploring sequences of change in high-performing IT firms

The impact of voluntary environmental disclosure on firm value: Does organizational visibility play a mediation role?

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