Cross-industry and cross-country evidence from the ESG–firm value literature indicates no consensus on the ESG performance impact on corporate financial performance. Stemming from the ongoing debate over whether ESG principles enhance or hinder value creation, this study investigates the effect of Environmental, Social, and Governance (ESG) performance on firm value through three proxies: Tobin’s Q (TQ), Price to Book ratio (PB), and Price to Earnings ratio (PE). Using a cross-country and cross-sectoral comparative approach, the study employs static and dynamic panel regression analyses, along with principal component analysis, to test the hypothesized relationships across nine MENA region countries and ten sectors between 2017 and 2022. To the best of the authors’ knowledge, this is the first study to examine ESG’s impact on TQ, PB, and PE while offering a comparative analysis in the MENA region. Empirical results reveal a significantly positive relationship between ESG scores and firm value using TQ and PB ratios, but this relationship is insignificant with the PE ratio. This study contributes to the ESG and financial decision-making literature, providing insights for investors on portfolio optimization and sustainable investing. The findings offer recommendations that further benefit businesses, policymakers, and decision-makers in enhancing their understanding of ESG implications.

The objective of this paper goes beyond the boundaries of an exploratory analysis to operationalize the association between corporate working capital and return on assets. This paper optimizes the impact of the Cash Conversion Cycle (CCC) on Return on Assets (ROA). The paper develops a mathematical formulation that connects the components of CCC to ROA. The sample includes the non-financial firms listed in DJIA30 and NASDAQ100. The data covers the quarterly periods from June 1992 to March 2018. The paper uses standard statistical tests including linearity (RESET), the Hausman test for fixed and random effects, and the Breusch–Pagan/Cook–Weisberg test for heteroskedasticity. The estimation is carried out using the GLS estimator. This study finds: (a) the optimal, rather than observed, components of CCC are robust and coherent, (b) if firms were to optimize the components of CCC, the ROA improves significantly, (c) the positive estimates of size show that the components of CCC help firms grow, (d) the effects of either observed or optimal CCC on ROA are reached in the short term (four quarters), (e) the results show that observed as well as optimal CCC are able to detect the structural break in the 2008 financial crisis, and (f) the results of a logit analysis show that the optimization algorithm results in significant increases in ROA that are associated with increases in degree of financial leverage and decreases in short-term debt ratio. This paper contributes to the related literature in two ways. First, the paper develops a mathematical structure that associates corporate CCC and ROA in a way that offers a guide to corporate financial managers regarding structural management of corporate CCC. Second, the paper examines the impacts of optimized CCC on ROA.

This study tests the efficiency and profitability of banks that belongs to two different sectors:a) Islamic Banks (IBs) and b) Traditional Banks (TBs). The stud

Financial signaling and stock return synchronicity may not be at crossroads. This paper optimizes the signaling effect of firms’ financial indicators on stock return synchronicity. The ultimate objective is to align firms’ financial signaling and stock return synchronicity, which implies a benefit of hedging against fluctuations in the stock market index. The data cover quarterly periods from June 1992 to March 2022 for the non-financial firms listed in the DJIA30 and NASDAQ100. This paper examines the observed return synchronicity as the dependent variable. The independent variables are classified into six groups namely, Solvency (or Liquidity) ratios, Assets Efficiency ratios, Expense Control ratios, Debt (or Leverage) ratios, Profitability ratios, and Dividend ratios. The analysis is conducted on two different groups. The first group examines the observed firms’ financials that affect observed stock return synchronicity. The second group examines optimal firms’ financials that help optimize stock return synchronicity. The final results show that (a) current stock return synchronicity is affected positively by cash ratio, and negatively by receivables and historical growth of earnings; (b) optimal stock return synchronicity can be elevated using significant financial indicators namely, Inventory/Current Assets, Net Working Capital/Total Assets, Net worth/Fixed Assets, and Sales Annual Growth; (c) agency conflicts between managers and shareholders can be mitigated by the aforementioned financial indicators, which do not include debt financing being the common source of agency conflicts; and (d) dividends are still insignificant to stock return synchronization.

Islamic banking caught attention due to its resilience to the significant shocks that hit the economy in late 2008. This research aims to evaluate the efficiency of a sample of 66 banks including both Islamic and traditional banks in various countries ranging from Egypt, Pakistan, Bangladesh, Saudi Arabia, Kuwait, Qatar, Iraq, Emirates, Sudan, Turkey, Bahrain and Jordan throughout 2009-2014. This research aims at identifying which banking regime proves to be more efficient and its significance using Financial Ratio Analysis (FRA), composed of cost efficiency, revenue efficiency and profit efficiency ratios along with the One-way ANOVA test. The impact of efficiency of the performance of the banks in terms of Return on Assets (ROA) and Return on Equity (ROE) is also evaluated through multiple regression analysis. Lastly, inflation’s effect on the different banking efficiency measures will be tested using regression analysis. The findings indicate that the traditional banking system is superior in terms of cost, revenue and profit efficiencies, furthermore, the results of the multiple regression analysis on the banks’ return on assets and return on equity imply that the efficiency of Islamic banks have more influence on their profitability compared to their traditional counterparts. Inflation had minimal effect on the efficiency of both banking system. The overall results imply the superiority of traditional banks to the relatively new banking system.