The effect of company growth on sustainable performance: A moderating perspective of stock mispricing in Indonesia and Japan
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Received March 5, 2024;Accepted April 14, 2024;Published May 30, 2024
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DOIhttp://dx.doi.org/10.21511/imfi.21(2).2024.26
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Article InfoVolume 21 2024, Issue #2, pp. 323-335
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The adoption of environmental, social, and governance (ESG) measures to realize socially responsible companies continues to accelerate, becoming a trend amid global uncertainty due to climate change and the COVID-19 pandemic. This study aims to examine the effect of company growth on sustainable performance, moderated by company stock mispricing in Indonesia and Japan, representing a developing and a developed country, respectively. This study uses panel data regression, namely the Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM), to test hypotheses. With a total of 42 observations from companies listed on the Indonesia Stock Exchange (IDX) and 112 observations from companies listed on the Japan Stock Exchange (JPX) during 2019–2020, the results show that a company’s growth has a negative effect on sustainable performance in Indonesia, while in Japan it has no effect. Stock mispricing strengthens the negative effect of company growth on sustainable performance in Indonesia but has no effect in Japan. This study found that companies in Indonesia place more emphasis on internal growth than on ESG implementation compared to companies in Japan. The implication of this study is that the implementation of ESG shows different dynamics when comparing two countries. Indonesia needs to evaluate the regulations governing socially responsible businesses in order to encourage further improvement of ESG performance. Meanwhile, in Japan, ESG practices have been running voluntarily, so enforcement from regulators is relatively less necessary.
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JEL Classification (Paper profile tab)Q56, Q51, M14
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References33
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Tables9
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Figures0
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- Table 1. Sample of Indonesian and Japanese companies
- Table 2. Variable measurements
- Table 3. Descriptive statistics
- Table 4. Market-to-book prediction to estimate stock mispricing
- Table 5. Descriptive statistics of Indonesia and Japan
- Table 6. Regression test results – Statistical model 1 in Indonesia
- Table 7. Regression test results – Statistical model 1 in Japan
- Table 8. Regression results – Statistical model 2 in Indonesia
- Table 9. Regression statistical model 2 results in Japan
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Conceptualization
Leddy Teresa Kristianthy, Erni Ekawati
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Data curation
Leddy Teresa Kristianthy
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Formal Analysis
Leddy Teresa Kristianthy, Erni Ekawati
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Funding acquisition
Leddy Teresa Kristianthy, Erni Ekawati
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Investigation
Leddy Teresa Kristianthy, Erni Ekawati
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Methodology
Leddy Teresa Kristianthy, Erni Ekawati
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Project administration
Leddy Teresa Kristianthy, Erni Ekawati
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Resources
Leddy Teresa Kristianthy, Erni Ekawati
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Software
Leddy Teresa Kristianthy
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Supervision
Leddy Teresa Kristianthy, Erni Ekawati
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Validation
Leddy Teresa Kristianthy, Erni Ekawati
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Visualization
Leddy Teresa Kristianthy, Erni Ekawati
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Writing – original draft
Leddy Teresa Kristianthy
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Writing – review & editing
Leddy Teresa Kristianthy, Erni Ekawati
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Conceptualization
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Environmental Performance Index: relation between social and economic welfare of the countries
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Financial sustainability management of the insurance company: case of Ukraine
Ruslana Pikus , Nataliia Prykaziuk , Mariia Balytska doi: http://dx.doi.org/10.21511/imfi.15(4).2018.18Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 219-228 Views: 3536 Downloads: 299 TO CITE АНОТАЦІЯIn the current conditions of the Ukrainian economy, which is characterized by crisis phenomena and frequent changes in legislation, the insurance organizations are facing a number of difficulties in maintaining their financial sustainability. Moreover, these processes take place under the increased requirements for solvency of insurers. However, a significant part of domestic insurance companies is financially unstable, which is conditioned not only by the lack of funds, but also by the low level of management. This situation hinders the further development of the insurance market in Ukraine and has a negative impact on all areas of the domestic financial system and prevents it from successful integration into the European financial field. In order to address this problem, it is necessary to distinguish the key groups of risks that affect the financial sustainability of insurance organizations, among which there are the following: insurance, strategic, market risk, risk of inefficient capital structure, risk of limiting the insurance company’s liquidity, tax risk, investment risk, operational risk, the risk of ineffective organizational structure of the enterprise, and information risk. It should be noted that under conditions of changing environment, the impact of these risks only increases, and therefore the task of minimizing the impact of these risks on the activities of insurance companies is highly important. Accordingly, the authors of the article proposed a four-stage strategy to manage the financial sustainability of the insurance company, the purpose of which is to identify the risks of limiting the insurer’s financial sustainability, their qualitative and quantitative assessment, as well as the development and implementation of appropriate measures to minimize and eliminate unacceptable consequences.