chapter-ii review of literature - shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/37222/4/4....
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CHAPTER-II
REVIEW OF LITERATURE
2.1 INTRODUCTION
The review of literature guides the researchers for getting better understanding
of methodology used, limitations of various available estimation procedures and data
base and lucid interpretation and reconciliation of the conflicting results. Besides this
the review of empirical studies explores the avenues for future and present research
efforts related with the subject matter. In case of conflicting and unexpected results,
the researcher can take the advantage of knowledge of other researchers simply
through the medium of their published works.
A large number of research studies have been carried out on different aspects
of the working of public and private sector by the researchers, economists and
academicians in India. Different authors have analyzed financial performance in
different perspective.
A review of these analyses is important in order to develop an approach that
can be employed in the context of the study of selected Indian Public Sector
Manufacturing Enterprises viz. Steel, Minerals and Metals, Coal and Lignite, Power,
Petroleum and Chemicals and Pharmaceuticals. Therefore, the present chapter reviews
the various approaches to the study on financial analysis and performance.
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2.2 INDIAN AND FOREIGN STUDIES
Rammohan Rao & et.al (1975)1 in this study how far the capital markets in
India were competitive. Their study examined the decisions about internal and
external finance as interrelated and consequent upon a choice of the structure of
current and fixed assets. Secondly, they analyzed the earnings pattern of different
types of funds to see if the competitiveness hypothesis can sustain.
They concluded that a firm’s ability to borrow was constrained by the rise
associated with the proportion of debt in the capital structure. If the ratio was high
then internal funds improved the firm’s ability to borrow. Similarly if the financial
leverage (Debt or equity ratio) was lower than the institutionally determined leverage.
The borrowing was facilitated. But if the leverage was the institutionally determined
maximum then borrowing was inhibited.
Vasanthamani (1982)2 in her study “The Financial Performance of
Lakshmi Machine Works Limited”. The objective of the study was to analyze the
financial performance of Lakshmi machine work with a view to analyze the future of
performance potentials. The study covered the period from 1978-1982. The liquidity
position of the company showed that the company was able to meet the creditors out
of its own current assets. The quick ratio also revealed that the quick liabilities were
met at of quick assets without any difficulty.
Altman (1989)3 in his “A Study on Financial Risk Management in Textile
Industry in India” for a period of ten years from 1978-1988. The objective of the
study was to find the structure and utilization of financial risk management in textile
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mills. Around twenty mills were taken for study. The findings of the study were total
investment in all selected textile units showings increasing trend. The conclusion was
blacked amount of cash in current assets was utilized at right time to purchase the
inventory.
Rajeswary (1990)4 in her study entitled “ Financial Performance of Precot
Mills Limited” has concluded that the financial position and operating efficiency of
the company was satisfactory where as the margin or safely was not stable solvency
position was not satisfactory and the earning capacity was minimum.
Parvathi (1990)5 in her “Financial Performance Analysis Hindustan
Photos Films Ooty” for the year 1990-1996,concluded that the gross profit has shown
as increasing trends, long term solvency of the company, debt equity ratio was not
satisfactory
Sankar.T.L & et.al (1995)6 in their study entitled, “Financial Performance
of State Level Public Enterprises” suffers from staggering investment, poor
profitability, unnecessary investment, poor project planning and inadequate financial
control.
Kim & et.al (1996)7 in Profitability, growth and risk (optimization), an attempt
was made to understand the profitability differentials in terms of simultaneously
determined inter-relational among profitability, growth and risk. The variables are
endogenous in firm profit maximization.
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Gnanavelu.N (1996)8 in his study entitled “Case Study of Financial
Performance of Sakthi Sugars Limited” has proved the financial performance of the
company passion is good. The borrowing by the company was kept at the minimum
level its profitability was expected to increase further. Being the row material in
seasonal the fluctuation in working capital cannot be avoided.
Roger M. Shelor & et.al (1998)9 .This study examines changes in “Operating
Performance Among Real Estate Investment Trusts” following an initial public
offering (IPO). The purpose is to determine whether there is an enhancement in the
value of the underlying asset that is related to the IPO. We separately analyze equity,
mortgage and diversified REITs. We also compare the operating performance of
recent IPOs to those of earlier years to address the impact of the 1993 Revenue
Reconciliation Act on institutional investors’ demand for REIT stock. Unlike previous
analyses of industrial firms, REITs were found to have significant increases in return
on Assets and selected measures of financial performance. The post-IPO cumulative
stock price decline and recovery is illustrated.
Pandey.I.M & et.al (1998)10 in their study, “Financial Ratio Pattern In
Indian Manufacturing Companies” they observed a declining trend in profitability
relation to shareholders equity and total investment, whose impact had been deepened
by the increasing interest burden.
Rajalaksmi (1998)11 in his study “Financial Performance of Raghupathy
Machine Works Limited”. The objective of this study was to evaluate the financial
performance of Raghupathy machine works with a view to analyze the future of
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performance potentials. The study covered the period from 1982- 1998.The liquidity
position of the company showed that the company was able to meet the creditors out
of its own current assets. The quick ratio also revealed that the quick liabilities were
met at quick assets without any difficulty.
Sardeesh Babu (1999)12 in her study “A Study on Financial Performance of
Fertilizers and Chemicals Travancore Limited” .The cost on various overheads can
be brought down by carefully scrutinizing each item and applying cost cutting
techniques. The profitability of the company can be improved by reducing the
expenses that do not contribute any productive use. The current assets can be managed
efficiently by examining the material holding and stock holding procedure and pattern.
If the company increase its turnover and reduces its cost, the profit will increase
leading to an increases in the growth rate of sales, profit before tax and profit after tax.
Mohammed Rafiqul Islam (2000)13 Studied the profitability of
Fertilizer Industry in Bangaladesh from 1985 – 1986 to 1994 – 1995. The
sample included fire fertilizer interstices in Bangladesh chemical industries
corporation (BCIC). The findings of the study indicated that none of the
selected units were consistent and all the units were plagued with declining
profits. The study concluded with suggestions for improvement of the
profitability of fertilizer industry in Bangladesh.
Shergill G.S et.al (2000)14 examined the market structure and financial
control. They found that there was negative relationship exists between concentration
to profitability, profitability to capital intensity due to ideal capital and a positive
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relationship observe between risk and profitability due to efficient management, an
ideal management seeks to achieve high profitability with low variation of earning.
MD Shan Alam (2001)15 analysed the cost and profitability of a public
sector paper mill. The study suggests that the monthly variance of material used,
labour costs and overheads expenditure should be prepared to control cost and
improve profitability.
Anil Kumar (2000) 16 in his study on “Financial Performance of Hindustan
Motors Limited, Cochin”, in his study found that the sales of the company were
showing an upward trend which reflected a growth in its profit. The tools use by him
were ratio analysis, the company’s financial position is favorable
Karthikeyan (2000)17 “Financial performance of selected automobile
companies, An analytical Study” tried to identify the relationship between the
financial performance variables and to develop simple financial forecasting
performance variables are analyzed to forecast the financial performance a simple
cross-section regression analysis was made. The financial analysis variables
considered were net sales, total assets, Gross profit, Profit before tax, Dividend,
Retained earnings, Cash flows and Net worth. He concluded that the sales have been
consistent in all the four year of study. Total asset have also been consistent in four
years under the study.
Mohammed Rafiqul Islam (2000)18 in this study “The Profitability of
Fertilizer Industry in Bangladesh.” The findings of the study indicate that none of
these selected units were plagued with profit.
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Sahu (2002)19 “A simplified model for liquidity analysis of paper
companies” in his analysis identified the effective of Liquidity Management with
usefulness and develops a simple model for current and quick ratios of 12 Indian
paper companies for the period of 1989 – 1990 to 1996 – 1997. This study revealed
the effective management of liquidity in the paper companies.
Padmaja Manoharan (2002)20 through the analytical study on “Profitability
of Cement Industry in India” has revealed the variation in profitability of Indian
cement companies depending on age, size and region. The study identified that quality
of earning depends on management and leverage management. Further, the analysis
concludes that the profitability and quality of earnings is influenced by the liquidity
factor.
Dr. Singh P.K. (2002)21 examined the working capital management of
Lupin Laboratories Ltd from the year 1995 – 1996 to 2001 – 2002, objective of the
study were (i) to assess the significances of working capital (ii) to identify the
elements responsible for changes in working capital and (iii) to study liquidity
position of the company the researcher observed position was very much satisfactory
and the increase in operations cycle indicated that there was a proper utilization of
working capital. He concluded that the company’s overall working position was
satisfactory and it was suggested that the debt collection policy was to be improved
Lilach Nachum (2002)22 in this study related to “The CBR Research
Program on Industrial Organisation, Competitive Strategy and Business
Performance”. this study was inspired by the observation that foreign financial
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service firms operating in the city of London do not suffer the liability of foreignness
to the extent suggested by theory, to examine the reasons for this departure from
theory, the study advances a theoretical framework that distinguishes between three
types of Advantages that together account for the competitive performance of MNEs
relative to that of indigenous firms. Empirical analyses of a sample of two hundred
and ninety six foreign financial service firms in the city of London shows that in this
particular context major sources of competitive performance are the firm-specific
advantage and the advantages of multinational, where British firms may not
necessarily possess an advantage over foreign firms. An examination of the validity of
the findings, in order to access the extent to which situation is unique to the city of
London or rather signifies a more general trend that requires theoretical modifications
and extensions, is emphasized as a major task for future research.
Ashita Raveendran (2003)23 presented a survey of the Financial Structure
and Performance of the Engineering Industry in Kerala. In her survey data of four
engineering groups, namely, metal products, machinery, electrical and transport
products were analysed. She concluded that the liberalized policy should at the
upgradation of the technology, therby improving the quality and productivity of the
engineering industry. Measures for cost control, modernization, upgradation,
computerization and the like. Will help in strengthening the forward and backward
linkages of the engineering industry within the state.
Dr.Sudarsana Reddy. G et.al (2003)24 Examined the Debtors Management of
Andhra Pradesh Paper Industry. The researcher undertook a Sample size of six
mills during 1989- 1990 to 1998 -1999. They objective that the sample mills adopted a
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liberal credit policy, size of trade debtors as a percentage of current assets shown a
declining trends but the collection period of debtors were showily increased which
revealed the slackness in collection efforts of the mills. They suggested that the aging
scheduled of dues to be prepared at frequent interval like quarterly, half, yearly and
monthly to frame appropriated dept policy.
Shanmugam and Bhaduri Samitra (2003)25 in their study analysed growth
of the Indian Manufacturing companies taking a sample of 390 companies during
1990 – 1993. The age and size of the companies were taken as independent variables
and growth in sales as dependent variable. The statistics techniques such as mean.
Standard deviation and regression analysis were used to study the growth of the
companies. The study showed that the age was positively influenced the growth and
size had negative and significant impact on growth.
Dr. Khatik SK and Ruadeep Kumar Singh (2003)26 have undertaken a case
study about the liquidity management of eicher ltd. Mandideep Bhopal. The
objective of the study were (i) to assess the significance of current ratio, acid test ratio
(ii) to examine and evaluate the liquidity position during 95- 96 to 98 -99. The
researchers observed that the short term liquidity position was not stable but
management of inventory and working capital were satisfactory. The company was
suggested to concentrate on management of current assets and debtors collection
period to improve their liquidity position.
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Satyanarayana chary and Venkateshwarlu (2003)27 in their study made an
attempt to examine to need, sources, components, estimation of working capital and
its impact on profitability with special reference to Sri Venkata Narasimha solvent oils
limited for the period of six years from 1996 – 1997 to 2001 to 2002. the result
showed that the company has not utilized its long term funds more effectively by
investing them in fixed assets, impact of working capital and profitability ratio’s
showed completely positive impact over the study period the study suggested that
correct estimation of working capital should be made and fluctuation in quantum of
working capital in relation to sales should be avoided.
Luiz Fernando Rodrigues de Paula (2003)28 in this study “This Paper Sets
out To Analyze The Statements of Recent Foreign Bank Investments In The
Brazillian Retail Banking Market And The Strategies of The Major European
Banks In Brazil”. Since the recent wave of banking internationalization, financial
institutions have continued to pursue their existing relationships while seeking greater
integration into local markets. The recent influx of European banks into Latin
America and Brazil, meanwhile, has been due to a varied range of factors, including
bank restructuring in Europe, the dynamic of internationalization in the Spanish
banking system and the process of market deregulation in the region. The paper also
stresses some common and specific features of the major European banks in Brazil.
One common feature is that they are large universal banks which have chosen to
develop abroad as a business expansion strategy.
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Christopher J.Green (2003)29, in this paper, Investigate the Efficiency of
Banks in Central and Eastern Europe. The aim is to evaluate whether foreign-
owned banks are more efficient than domestic banks and can therefore play a key role
in energizing the emerging financial systems in transition economics. Our measures of
efficiency are based on standard microeconomic theory. Using a panel of 273 foreign
and domestic banks located in Bulgaria, Coratia, the Czech Republic, Estonia,
Hungary, Lativa, Lithuania. Poland and Romania for the period 1995-1999, we
estimate a system of equations, consisting of an augmented translog cost function and
two cost shares.
Anshan Lakshmi (2003)30 made “A Study of The Financial Performance
With Reference To Steel Industries Kerala Ltd”. This study covered from 1977-
1998 to 2001-2002, the objectives of the study was to analyze and evaluate the
working capital management, to analyze the liquidity position of the company, to
evaluate the receivables, payables and cash management and to suggest ways and
means to improve the present date of working capital. The major tools used for the
analysis say that the working capital management was every author suggested that the
inventory management have to be corrected.
Santany Kumar Ghosh & et.al (2003)31 in this paper, “Utilization of
Current Asset and Operating Profitability and an Empirical Study on Cement
and Tea Industries in India”. The study concluded that the degree of current asset in
positive associated with the operating profitability of the firm.
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Ghosh and Maji (2004)32 examined the efficiency of working capital
management of Indian cement companies from 1992- 1993 to 2001 – 2002 instead
of using the common method of analyzing different working capital management
ratios, three index values representing the average performance of the components of
current assets, the degree of utilization of the total current assets relation to sales and
efficient in managing the working capital have been computed for the selected. firms
over the ten year study period
Hamsalakshmi and Manickam (2004)33 has made “A study on financial
performance analysts of selected software companies” The study has been focused
on examining the structure of liquidity position leverage and profitability. The study
has revealed a favorable liquidity position and working capital position. The study has
also pointed out that the companies rely more on internal financing and the overall
profitability has been increasing at a moderate rate.
Bardia (2004)34 in the study on “Liquidity and Management – A case study
of Steel Authority of India Limited” analysed the management of liquidity position
of Steel Authority of India Limited, one of the largest public sector steel
manufacturing companies of India for the period 1991-92 to 2001-02. The study
assessed the liquidity maintained by the steel giant and examined the liquidity position
of the company based on some important parameters mainly employed for measuring
liquidity. The study has applied comprehensive rank test for comparing the liquidity
position of the company. Spearman’s rank correlation has been applied to extent of
relationship between liquidity and profitability. The study concluded that the liquidity
and profitability more in the same direction and Spearman’s rank correlation co-
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efficient and students ‘t’ test showed a significant positive association between
liquidity and profitability of the company during the period under study.
Narware (2004)35 in his study on Working Capital and Profitability an
Empirical Analysis, has examined the interrelationship between profitability and
working capital with the assistance of ratio analysis. He has also employed correlation
analysis between selected ratios relating to working capital management and ROI,
multiple regression analysis has been employed to ascertain the impact of working
capital and profitability. His analysis revealed that working capital management and
profitability disclosed both negative and positive association.
Narware and Vivek Sharma (2004)36 in their study on Liquidity Management
of Hindustan Petroleum Corp. Ltd analyses the liquidity management during 1995
– 1996 with the help of selected ratios they concluded that there was in adequacy of
funds due to a high contribution of inventory in current assets.
Clement & et.al (2005)37 in their study on “Automobile Purchase: Peer
Influence In Decision Making” based on the study the objectives are to analyze the
major factors influencing the purchase to find out the factors influencing peer groups
in the purchase of car by it size to determine the most influencing peer group in the
purchase process. The major findings are most of the sample respondents taken for the
studies were in the age group of 30-40. Peer group ‘Friends’ are reported as the most
infusing factor for purchase decision brand in able value, publicity and defeats’
network after sales service and vehicle performance were found to be significant
factors influencing purchase decision of cars.
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Pandey.I.M (2005)38 viewed that the two important aims of the Working
Capital Management and profitability and liquidity solvency refers to the company
ability to meet their obligations. To ensure the solvency, the company should be very
liquid which means large amount of current assets holdings if the company maintain
relatively larger current assets than the requirements, the company’s profitability will
suffer to the extent the investment was idle to have higher profitability, the company
had to sacrifice the liquidity company had to sacrifice the liquidity position.
Maintaining these two in the same direction was challenging and difficult task which
the finance manages encounter.
Shanmugam (2006)39 in his study Liquidity – Profitability International
ships. A Sectoral Analysis revealed that trend of working capital, overall profitability
ratios, inter-relationships between working capital accounts and selected financial
variables and inter-relationship between liquidity and profitability in Engineering
Industry in India for the period 1991 – 2000. It concluded that the inter-relationship
between sales and working capital accounts are found to be significant for the
industry.
Dr. Santancy, Dr.ghosh et.al (2006)40 in their study on Impact of Operating
Leverage Profitability of selected Indian Industries examined the Empirical
relationship between the degree of operating leverage and profitability by taking a
sample of 72 companies from four industries namely tea, chemical, paper and
pharmaceutical . they observed that the degree of operating leverage was positively
associated with operating profitability .
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Misra D.P and Mishra P.K (2006)41 attempted an empirical study on Factor
Influencing Profitability of Orissa State Warehousing Corporation during 1985 –
1986 to 2002-2003. the objective were to examine the influences of independent
factor viz growth in size, growth in volume of business, operating cost ratio, leverage
liquidity receivable turnover fixed assets turnover end age on profitability by stepness
regression analysis, they concluded that operating cost ratio, liquidity ratio, fixed
assets turnover ratio. Combined around 97% of the variation towards profitability of
Orissa state warehousing corporation.
Dr.Das P.K (2006)42 examined the Dividend practices in selected Cement
Industries Ltd during 85 -86 to 2004 -2005. He found that the company followed a
conservative dividend policy during the study period. There was significant increase
in profitability due to earnings per share and capital employed current ratio was in
decaling trend.
D. Deep and Umaya Salma Sharahan (2007)43 presented Liquidity
Management of Leading Automobile Study an empirical study on liquidity
management of leading automobile company from 1995 to 2006. The researcher
observed that the liquidity position of the company it was suggested that to utility its
assess in an effective manner increase cash balance and reduce its current liability.
Ramachandra Reddy & et al. (2007)44 in his research work Financial
Performance through Market Value added (MAV) approach. The study has been
made to examine the effect of selected variables as MAV, for the purpose of analysis,
10 cement companies were selected in Andra pradesh.
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because of its contribution to the industrial output, employment generation and foreign
exchange earnings. One of the earliest to come into existence in India, it accounts for
14 per cent of the total Industrial production, contributes to nearly 30 per cent of the
total exports and is the second largest employment generator after agriculture. Profit
earning is the aim of business. In the course of analysis of this study various Statistical
techniques have been made. The Statistical techniques used are correlation, t-test, and
Multiple Regression analysis to find out the relationship between the variable and to
identify the factor influencing the profitability. Based on the analysis net sales and net
profit have some relationship and working capital management was a highly
influencing factor to find out profitability of selected textile companies in Coimbatore
district. Companies must concentrate with other influencing factor for better profit of
the company.
Tyler Yu & et al. (2009)59 examine “Comparative analysis of financial
performance of companies with female CEOs and companies without female
CEOs”, the financial performance of companies with executive-level women, those
who are sitting in boardrooms, and compare them with those without female
executives. This study conducted the hypothesis tests to examine differences in
financial performance between companies with female CEOs and those without.
Pieter Van Beurden & et al. (2009)60 reported “The European Identity in
Business and Social Ethics, The Worth of Values, A Literature Review on the
Relation between Corporate Social and Financial Performance” that the Relation
between Corporate Social and Financial Performance. One of the older questions in
the debate about Corporate Social Responsibility (CSR) is whether it is worthwhile for
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organizations to pay attention to societal demands. This debate was emotionally,
normatively, and ideologically loaded. Up to the present, this question has been an
important trigger for empirical research in CSR. However, the answer to the question
has apparently not been found yet, at least that is what many researchers state. This
apparent ambivalence in CSR consequences invites a literature study that can clarify
the debate and allow for the drawing of conclusions. The results of the literature study
performed here reveal that there is indeed a clear empirical evidence for a positive
correlation between corporate social and financial performance. Voices that state the
opposite refer to out-dated material. Since the beginnings of the CSR debate, societies
have changed. It can therefore clearly state that, for the present Western society,
“Good Ethics is Good Business.”
Aitken Et (2009)61 studied “Financial Analysis and Price Discovery”, the
bank\ brokerage firm has top-rated financial analysts and high wall street search
ranking for their research was significantly related to that firm’s contribution to price
discovery of the process by which information is incorporated into the stock prices.
This study related to cross-sectional characteristics of the quality of brokerage
research, the asymmetric information environment and order flow volume to a
microstructure measure of price discovery developed by Granger and Gonzalo. It
measured analysis research quality with an industry-specific ranking by institutional
investors, with an opinion survey of trading desk personnel and with the number of
top three analysts across all industries employed by the bank/ brokerage firm.
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Edward Nelling & et al. (2009)62 examine “Corporate social responsibility
and financial performance, the causal relation between corporate social
responsibility (CSR) and financial performance. Consistent with past studies, it finds
that the two variables appear to be related when they use traditional statistical
techniques. However, using a time series fixed effects approach, find that the relation
between CSR and financial performance is much weaker than previously thought. It
also finds little evidence of causality between financial performance and narrower
measures of social performance that focus on stakeholder management. The study
suggested that strong stock market performance leads to greater firm investment in
aspects of CSR devoted to employee relations, but that CSR activities do not affect
financial performance. It concluded that CSR is driven more by unobservable firm
characteristics than by financial performance.
Dharmendra S. Mistry(2010)63 in this study ”A Comparison of Financial
Performance of Major Gujarat Pharma” players through value added and
economic value added”. The purpose of this study is to classify major Gujarat
pharmacy players in cohesive categories on the basis of their financial characteristic
revealed by the financial statements. The study also revealed that economic value
added has also positive correlation with firm size, funds of proprietors, and funds of
money lenders and have significant impact on economic volue added.
Yimin Zhang & et al. (2010)64 considers the cost structure, profitability and
productivity of the Chinese textile industry and estimates the impacts of RMB
appreciation on this industry for 1999–2006. It was found that the industry has
suffered from very low profit margins and returns on capital. Because input prices
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have been increasing, particularly since 2001, generating profits has become more
difficult for the industry. Nevertheless, the industry achieved substantial productivity
growth during the period examined. Although at an inadequate level, the profitability
of the industry did show some signs of improvement. As long as this trend continues,
the industry could obtain a decent level of profitability. Since 2005, however, the
industry has faced a new challenge: the appreciation of the RMB. Based on 2006 data,
it estimated the maximum rate of RMB appreciation that the industry would be able to
sustain to be approximately 5 percent a year.
Shveta Kapoor (2010)65 examines the impact of Corporate Social
Responsibility (CSR) on Corporate Financial Performance (CFP) in terms of
profitability and growth after controlling the effect of other variables on financial
performance. Secondary data on CSR based on 93 companies operating in India have
been analyzed by applying content analysis of annual reports for the year 2005–06.
For CFP and control variables, secondary data have been collected for seven-year
period from 1999–2000 to 2005–06 from Prowess, electronic database developed by
Centre for Monitoring Indian Economy (CMIE), Mumbai. The Statistical tests namely
factor analysis and multiple regression analysis has been applied. The results indicate
that a significant positive impact of CSR on corporate profitability and insignificant
positive impact on corporate growth. The study is helpful for managers in considering
the positive impact of CSR on corporate profitability while taking decisions about
investing in CSR areas.
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Algorithms for business education and research in the 21st century (2010)66.
“Financial performance analysis of US and world telecommunications
companies: Importance of Information Technology in the telecommunications
industry after the AT&T breakup and the NTT divestiture Decision Support
Systems”. This article highlights the Importance of Information Technology in the
telecommunications industry after the AT&T breakup and the NTT divestiture
Decision Support Systems New concepts, methodologies and algorithms for business
education and research in the 21st century. This study investigates the financial
performance of the world telecommunications industry by DEA–DA (Data
Envelopment Analysis–Discriminant Analysis). The proposed use of DEA–DA has a
linkage with Altman's Z score that has long served as a methodological and
conceptual basis in finance. Based upon the Z score of telecommunications
companies, it ranks them for financial assessment. After evaluating the financial
performance of the firms, this study pays attention to the financial performance of
AT&T (American Telephone & Telegraph) and NTT (Nippon Telegraph and
Telephone) after their divestiture. This study finds that AT&T outperformed NTT
because AT&T changed itself to an IT (Information Technology) company that
provides wireless communications services and other IT services, but NTT separated
IT and wireless services into the other companies after the breakup.
Gurbuz Osman & et al. (2010)67 evaluates “Corporate Governance and
Financial Performance with a Perspective on Institutional Ownership: Empirical
Evidence from Turkey” the impact of corporate governance on financial
performance in Turkey, taking the issue of institutional ownership into account. The
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purpose of this study is also to explore how the financial performance of the
companies which are listed in the Corporate Governance Index is affected by
institutional ownership, distinguishing between domestic and foreign ownership. It
employs panel data analysis on a sample of 164 firm-year observations for real sector
firms on the Istanbul Stock Exchange (ISE) covering the four year time span from
2005-2008. The results of the analyses demonstrate the positive influence of corporate
governance and institutional ownership on the financial performance. Additionally,
the impact of institutional investors is found to be more strongly pronounced on firms
listed on the corporate governance index.
Aerts Walter & et al. (2010)68 in “Financial performance explanations and
institutional setting” their investigation whether country differences in the
institutional setting for financial reporting affect the attributes of managers
explanations of performance in management commentary reports. It includes 172
listed companies from five industries (building materials, food processors,
pharmaceuticals, bio-technology and retail) in the UK, Australia, the USA and Canada
in 2003. The researchers found significant country differences in attribution properties
of performance explanations in management commentary reports. The US and
Canadian companies are generally less assertive and less defensive in causal
explanations offered as compared to their counterparts in the UK and Australia. The
North American companies are also more extensive and formal in their explanations,
relying more heavily on technical-accounting language. These tendencies are most
pronounced in the USA, where the aggregate of private and public enforcement is the
greatest. Taken together, the evidence suggests that higher expected regulatory and
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litigation costs induce a more elaborative, but risk-averse explanatory stance that may
well reduce the overall incremental value of the overall financial performance offered.
Ried Edwardj & et al. (2010)69), “Signaling Firm performance through
financial Statement Presentation”, investigate whether managers’ presentation of
special items within the financial statements reflects the economic performance or
opportunism. Specifically, special items presented as a separate line item on the
income statement (income statement presentation) to those aggregated within another
line item with disclosure only in the footnotes (footnote presentation). The study is
motivated by standard-setting interest in performance reporting and financial
statement presentation, as well as prior research investigating managers’ presentation
choices in other contexts. Empirical results reveal that special items receiving income
statement presentation are less persistent, relative to those receiving footnote
presentations. These results are consistent across numerous alternative specifications.
Overall, the findings are consistent with managers using the income statement versus
footnote presentation to assist users in identifying those special items most likely to
differ from other components of earnings - that is, for informational, as opposed to
opportunistic and motivations.
Roy Tirthankar (2010)70 surveys “Technological change in Indian textiles
Industry”, the technological changes in the industry during the period since 2005, the
onset of reforms in the country. Although the industry is generally termed as a low
technology one, it does employ high technology processes and machinery.
Liberalization has resulted in the importation of second hand machinery and
technological changes in the domestic textile machinery sector.
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Truetf Lila and Truetf Dale (2010)71 “New Challenges for the South
African Textile and Apparel Industries in the Global Economy” used a cost
function to investigate the presence of scale economies and the nature of input
interrelationships. The findings include statistically significant economies of scale
present in both industries and cross price elasticity estimates indicating that most
inputs are substitutes for one another. The first result offers an opportunity to reduce
unit costs if these industries can grow their markets. However, lower prices on
imported intermediate goods will likely decrease the demand for domestic inputs. The
cross price elasticity of demand is relatively low in some cases, consistent with
domestic input market rigidities and international trade restrictions.
Shurveer S. Bhanawat (2011)72 in this study “Impact of Financial Crisis on
The Financial Performance of The Indian Automobile Industry” India a country
diverse in culture and religion, strong in will and manpower, large in size and
opportunities has become a highly wooed automobile market. Despite the impact of
the financial and economic crisis, India’s automobile economy is booming. Due to
global financial crisis various sectors of industries were affected. In this connection
here we tried to judge the impact of financial crisis on Indian Automobile Industries
with the help of statistical significant techniques. On the analyses of the t-Test and
Analysis of Variance, it is found that the impact is not significant which proves that
though the global economies are impacted by recession, the Indian Automobile Sector
showed resilience and was not affected significantly by the recession. It goes to show
that the Indian automobile market, though impacted by export income, did not
crumble under recession, as the volumes were significantly met by local demand,
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thereby proving that the Indian economy is a self sustaining economy, not
significantly impacted by the financial crisis.
Mine Aysen Doyran & et al. (2011)73 suggested “Lesson for Latin America
from the Asian textile industry experience” the lessons for Latin America from the
Asian textile industry experience. This paper examines recent statistics in US textile
and clothing trade with selected Latin American and Asian economies, comparing
data on textile exports from the top 10 suppliers between 1995 and 2003. It evaluates
the initial effects of the Agreement on Textiles and Clothing (ATC) of 1995, which
provided for a 10-year quota phase-out process for WTO member countries. Since its
accession into WTO, China has replaced Mexico as the top supplier of goods to the
US. In addition, a brief comparison with other international experience of emerging
economies is provided in order to elucidate the relevance of the textile industry in the
region and world economy. This empirical work can be the starting point for policy
makers to design long-term policies that are needed for Latin America to compete
successfully in the US market and promote the restructuring of clothing and textile
production at the country level.
Prasanta Paul (2011)74 reported that Financial Performance Evaluation - A
Comparative Study of Some Selected NBFCs. In this study, five listed NBFCs have
been considered for analyzing comparative financial performance. Different statistical
tools like, Arithmetic mean, Standard Deviation, Coefficient of Variance, Correlation
and Analysis of Variance have been used extensively. Arithmetic Mean (AM) is an
ideal measure of central tendency, which is rigidly defined, easy to calculate, based on
all observations and affected least by fluctuations of sampling has been applied in this
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study. It has been used to get a stable average and it is easy to understand the results
of the study. It conclude that the selected companies differ significantly in terms of
their financial performance indicators from one to another, may be for the different
services they provide. There are no significant differences in the last five years in the
management of financial performance of each selected NBFCs, except marginal
deviation in some cases in the year 2006-07 may be for the effect of general recession
in that period
Kirca Ahmet(2011)75 focuses study on Firm-Specific Assets,
Multinationality and Financial Performance - A Meta-Analytic Review and
Theoretical Integration. The meta analysis were used at two hundred and twenty
independent samples and examines the predictions of internalization theory in the
context of the multinationality-performance relationship. The findings indicate that
multinationality provides an efficient organizational form that enables firms to transfer
their firm-specific assets to generate higher returns in international markets. In
addition, the results delineate the conditions under which firm-specific assets have the
strongest impact on the multinationality-performance relationship. Meta-analytic
evidence also suggests that multinationality has intrinsic value above and beyond the
intangible assets that firms possess, given analyses controlling for firms' international
experience, age, size, and product diversification.
Sheela Christina (2011)76 carried out the study on Financial Performance
of Wheels India Limited-Chennai. The study deals with Analytical type of research
design with the help of secondary data collection method. For this purpose the
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researcher took past five years’ data and also checked out for the validity and
reliability before conducting the study. The researcher used the following financial
tool namely ratio analysis, comparative balance sheet and DuPont analysis and also
statistical tools such as trend analysis and correlation. Profitability ratios indicate there
is a decrease in the profit level, utilization of fixed assets and working capital in the
last financial year. Thus the company can take necessary steps to improve sales and
profit. Finally, the study reveals that the financial performance is satisfactory.
Neha Mittal (2011)77 studies the determination of capital structure choice of
the selected Indian industries. The main objective is to investigate whether and to
what extent the main structure theories can explain the capital structure choice of
Indian firms. It has applied multiple regression models on the selected industries by
taking data for the period 2001-2008. It examines the relevance of capital structure in
selected Indian industries based on a regression analysis and data study. It concludes
that the main variables determining capital structure of industries in India are agency
cost, assets structure, non-debt tax shield and size. The coefficients of these variables
are significant at one per cent and five per cent levels.
2.3 CONCLUSION
A Literature review can be just a summary of the sources, but it usually has an
organizational pattern and combines both summary and synthesis. From the above
literature, reviews related to Petroleum Industries will help to analyze the research
problem of financial performance of Petroleum industries.
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52
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