The Effect of Financial Performance on ESG Performance in European listed companies: Earnings Management as a Mediator
By Omar Al-Habashneh, Ahmed Abdul Latiff, Chew Loke
PDFAbstract
This study examines the relationship between financial performance and ESG performance in European listed firms, emphasizing the mediating role of earnings management. Using panel data from 2010–2023, the analysis applies firm fixed-effects models with clustered robust standard errors to control for unobserved heterogeneity. Financial performance is measured through Return on Assets (ROA), Tobin’s Q, and Net Profit Margin, while earnings management is captured using discretionary accruals. The results show that financial performance does not directly enhance ESG performance. ROA exhibits a significant negative association with ESG scores, whereas Tobin’s Q and Net Profit Margin are statistically insignificant. Further analysis indicates that profitability increases earnings management practices, which in turn negatively affect ESG performance. Bootstrapping confirms a significant indirect effect, supporting partial mediation. The findings suggest that the financial performance–ESG nexus operates primarily through managerial reporting behavior rather than direct resource allocation, highlighting the importance of governance quality and reporting integrity in regulated European markets.
The Impact of Business Intelligence on Decision-Making Effectiveness: The Moderating Role of Organizational Culture in Indonesian Commercial Banks
By Yoesoep Rachmad
PDFAbstract
This study examines the impact of Business Intelligence (BI) usage on decision-making effectiveness in Indonesian commercial banks, considering the moderating effect of organizational culture. The research targeted employees in technical, analytical, and managerial roles across commercial and Islamic banks operating in Indonesia. A structured questionnaire was developed and distributed electronically, with twenty questionnaires allocated to each of the sixteen participating banks, yielding 320 distributed instruments. Of the responses received, 288 questionnaires were deemed valid for statistical analysis after excluding twelve incomplete or invalid responses. The study adopted a quantitative, descriptive-correlational design and analyzed the data using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS software, following the two-stage approach of assessing the measurement model and then the structural model. The results revealed statistically significant positive effects of Business Intelligence usage on decision-making effectiveness and of organizational culture on decision-making effectiveness, as well as a statistically significant positive moderating effect of organizational culture on the relationship between Business Intelligence and decision-making effectiveness. The proposed model explained 51.2% of the variance in decision-making effectiveness. Based on these findings, the study recommends strengthening data governance practices, investing in employee data literacy, and cultivating a supportive data-driven organizational culture to maximize the return on Business Intelligence investments.