Examining Financial Performance and Corporate Governance in Tehran Stock Exchange: A Hybrid Machine Learning and Data Envelopment Analysis Approach
الموضوعات :
Pooneh Noparvar Saravi
1
(Master's student in Accounting, Rozbahan Higher Education Institute, Mazandaran, Iran)
Morteza Bagheri
2
(Master's student in Accounting, Shahid Beheshti University, Tehran, Iran, )
Seyed Sadegh Hadian
3
(Master's student in Accounting with a specialization in Auditing, Faculty of Administrative and Economic Sciences, Ferdowsi University, Mashhad, Iran)
الکلمات المفتاحية: Financial Performance , Corporate Governance, Machine Learning, Human Capital,
ملخص المقالة :
In the backdrop of an ever-evolving global business landscape and intense market competition, companies are faced with the imperative of strategically managing factors that influence their financial performance. This research delves into the intricate relationship between financial performance enhancement and corporate governance, with particular attention to the mediating role of human capital. The study centers its investigation on companies listed on the Tehran Stock Exchange and comprises a comprehensive sample of 140 top-level managers. A composite sampling approach, comprising a simple random sampling technique and Morgan's table, was employed to judiciously select a representative cohort of 103 participants. In the pursuit of rigorous academic analysis, the research leverages a goal-oriented, applied methodology, employing a descriptive survey design and a quantitative approach. The primary data for the study were methodically collected through rigorously designed and standardized questionnaires. Subsequent to data acquisition, a meticulous analytical process was undertaken using the Partial Least Squares (PLS) software, aligning with the latest developments in quantitative research techniques. The results stemming from hypothesis testing offer compelling insights into the dynamic relationship between corporate governance, human capital, and financial performance enhancement. Our findings convincingly demonstrate a significant positive impact of both corporate governance and human capital on the enhancement of financial performance in the context of Tehran Stock Exchange's listed companies. Furthermore, the empirical evidence strongly suggests that human capital plays a pivotal mediating role in the relationship between corporate governance practices and financial performance improvements. This study, in its pursuit of academic rigor, underscores the effectiveness of a novel hybrid approach, thoughtfully integrating machine learning and data envelopment analysis, to comprehensively examine the intricate interplay between financial performance enhancement and corporate governance within the context of the Tehran Stock Exchange's listed companies. The study contributes to the evolving body of literature in this domain and provides valuable insights for practitioners, policymakers, and researchers.
[1] Akhoundi, M., Dehghan, A.,Examining Some Corporate Governance Mechanisms and Their Impact on Stock Value and Expected Earnings in Listed Companies on the Stock Exchange, Knowledge of Investment, 2022; (43), 351-371. (in Persian)
[2] Heidari Kurdzanganeh, G., Noroosh, I., Jafari, M. H., Social Responsibility and Financial Performance in Listed Companies on the Tehran Stock Exchange, Economic Journal, 2017; (3), 53-78. (in Persian)
[3] Rezavi Heydari, S. M. N., Demouri, D., & Sabokro, M., The Effects of Human Capital Accounting on the Financial Performance of Branches of Bank Melli Iran (Case Study: Branches of Bank Melli in Mashhad City), Human Resources Training and Development, 2021; 4(3), 81-98. (in Persian)
[4] Sangingorpour, A.,The Role of Marketing in Improving the Financial Performance of Travel Agencies. Tourism Management Studies, 2018; (43), 171-202. (in Persian)
[5] Kafil, V., Mirzaei Nazamabad, M., Hosseinlou, H., Intellectual Capital and Its Impact on Financial Performance of Pharmaceutical Companies, Development and Capital, 2022; (2), 157-172. (in Persian)
[6] Gerd, A., Chakav, M. R., Jahan-Shaeyan, M., Investigating the Relationship between Corporate Governance and Financial Performance with Emphasis on Non-linear Relationships and the Role of Board Structure and Ownership Structure, New Approaches in Management and Accounting Research, 2018; 2(7), 250-261.
[7] Lari, M., Hajizadeh, F., Sofi, H. A., Examining the Relationship between Strategic Human Capital and Improving Financial Performance in the Banking Industry, Journal of Monetary and Banking Research, 2017; (32), 247-265.
[8] Al-ahdal, W. M., Alsamhi, M. H., Tabash, M. I., & Farhan, N. H., The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation, Research in International Business and Finance, 2020; 51, 101083.
[9] Amankwah-Amoah, J., Human capital flows in failing organizations: an integrated conceptual framework, Journal of Intellectual Capital, 2018.
[10] Dashtbayaz, M. L., Salehi, M., Mirzaei, A., Nazaridavaji, H.,The impact of corporate governance on intellectual capitals efficiency in Iran, International Journal of Islamic and Middle Eastern Finance and Management, 2020.
[11] Hakimah, Y., Pratama, I., Fitri, H., Ganatri, M., Sulbahrie, R. A., Impact of Intrinsic Corporate Governance on Financial Performance of Indonesian SMEs, International Journal of Innovation, Creativity and Change, 2019; 7(1), 32-51.
[12] Kakaei, H., Dehghan NajmAbadi, A., Fotoohi Zadeh, M., & Asadzadeh Firoozabadi, A., Investigating the Role of Entrepreneurial Marketing on Innovative Performance: The Effect of Human Capital Mediation (Case Study: Small and Medium-sized Knowledge-Based Companies, Tehran University Science and Technology Park), Jounal of Marketing Management, 2021; 16(53), 51-67.
[13] Kiptoo, I. K., Kariuki, S. N., Ocharo, K. N., Corporate governance and financial performance of insurance firms in Kenya, Cogent Business & Management, 2021; 8(1), 1938350.
[14] Lajili, K., Lin, L. Y. H., Rostamkalaei, A., Corporate governance, human capital resources, and firm performance: Exploring the missing links, Journal of General Management, 2020; 45(4), 192-205.
[15] Muttaqin, Z., Fitriyani, A., Ridho, T. K., Nugraha, D. P., Analisis Good Corporate Governance, Leverage terhadap Nilai Perusahaan dengan Profitabilitas Sebagai Variabel Pemoderasi. Tirtayasa Ekonomika, 2019; 14(2), 293-309.
[16] Olarewaju, O. M., Msomi, T. S., Intellectual capital and financial performance of South African development community’s general insurance companies. Heliyon, 2021; 7(4), e06712.
[17] Roy, A., Corporate governance and cash holdings in Indian firms. In Governance and Regulations’ Contemporary Issues, Emerald Publishing Limited, 2018. Doi:10.1108/S1569-375920180000099005
[18] Soewarno, N., & Tjahjadi, B., Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia, Journal of Intellectual Capital, 2020. Doi: 10.1108/JIC-09-2019-0225
[19] Tejedo-Romero, F., & Araujo, J. F. F. E, The influence of corporate governance characteristics on human capital disclosure: the moderating role of managerial ownership. Journal of Intellectual Capital, 2020; 23(2), 342-374.
doi: 10.1108/JIC-03-2019-0055
[20] Wang, M. C., The relationship between firm characteristics and the disclosure of sustainability reporting. Sustainability, 2017; 9(4), 624. Doi: 10.3390/su9040624
[21] Hastie, T., Tibshirani, R., Friedman, J.,The elements of statistical learning: data mining, inference, and prediction. Springer. This reference provides a comprehensive overview of statistical learning, including topics related to Machine Learning algorithms and their applications, 2009.
[22] Bishop, C. M., Pattern recognition and machine learning. Springer. This book focuses on the fundamentals of pattern recognition and machine learning, covering various algorithms and techniques in depth, 2006. Doi: 10.1117/1.2819119
[23] Goodfellow, I., Bengio, Y., Courville, A., Deep learning. MIT Press. This reference delves into deep learning, a subset of Machine Learning that involves neural networks, and provides insights into their applications and architectures. (2016).
[24] Mitchell, T. M., Machine learning. McGraw Hill. This comprehensive textbook covers a wide range of Machine Learning algorithms, providing a solid foundation for understanding the field. 1997
[25] Chollet, F., Deep learning with Python. Manning Publications. This practical guide focuses on deep learning techniques using the Python programming language, providing hands-on examples and implementation details. 2018
[26] Rumelhart, D. E., Hinton, G. E., Williams, R. J., Learning representations by back-propagating errors, Nature, 1986; 323(6088), 533-536.
[27] Lapedes, A. S., Farber, R., Nonlinear Signal Processing Using Neural Networks: Prediction and System Modeling, Los Alamos National Lab NM. 1988
[28] McCulloch, W. S., Pitts, W., A logical calculus of the ideas immanent in nervous activity. Bulletin of Mathematical Biophysics, 1943; 5(4), 115-133. Doi: 10.1007/BF02478259
[29] Kohonen, T., Self-organized formation of topologically correct feature maps, Biological Cybernetics, 1982 ;43(1), 59-69. Doi: 10.1007/BF00337288
[30] Werbos, P. J., Beyond Regression: New Tools for Prediction and Analysis in the Behavioral Sciences. PhD Thesis, Harvard University. 1974
[31] Easley, D., & O'Hara, M., Information and the Cost of Capital. Journal of Finance, 2004; 59(4), 1553-1583. doi:10.1111/j.1540-6261.2004.00675.x.
[32] Jagadeesh, N., & Titman, S., Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. Journal of Finance, 1993; 48(1), 65-91.33] Li, X., Wei, Y., & Wang, H., Stock Price Forecasting Model Using Back Propagation Neural Network. International Journal of Simulation: Systems, Science and Technology, 2017; 18(5), 15.
[34] Khedekar, P., & Sonawane, S., Stock Price Prediction Using K-Nearest Neighbor (k-NN) Algorithm. Procedia Computer Science, 2015; 45, 251-257
[35] Chen, K., Liu, H., & Sun, X., Stock Investment Strategy with Support Vector Machines and an Improved Decision Tree Algorithm. Computational Intelligence and Neuroscience, 2018
[36] Sharma, A., & Kumar, A., A Novel Approach to Select Best Performing Mutual Funds Using Decision Tree. Procedia Computer Science, 2016 ;85, 552-559.
[37] Charnes, A., Cooper, W. W., & Rhodes, E., Measuring the efficiency of decision-making units. European Journal of Operational Research, 1978; 2(6), 429-444. Doi:10.1016/0377-2217(78)90138-8
[38] Banker, R. D., Charnes, A., & Cooper, W. W., Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 1984; 30(9), 1078-1092. Doi: 10.1287/mnsc.30.9.1078
[39] Cooper, W. W., Seiford, L. M., & Tone, K., Data envelopment analysis: A comprehensive text with models, applications, references and DEA-Solver software. Springer Science & Business Media. 2007. Doi: 10.1007/978-0-387-45283-8
[40] Zhu, J., Quantitative models for performance evaluation and benchmarking: Data envelopment analysis with spreadsheets, Springer Science & Business Media. 2013. Doi: 10.1007/978-3-319-06647-9
[41] Tone, K., A slacks-based measure of efficiency in data envelopment analysis, European Journal of Operational Research, 2001; 130(3), 498-509. Doi: 10.1016/S0377-2217(99)00407-5
