The relation between R&D expenditures and financial performance of textile firms traded in Istanbul stock exchange (BIST): Evaluation through panel data analysis

Chia sẻ: Huỳnh Ngọc Toàn | Ngày: | Loại File: PDF | Số trang:8

Thêm vào BST

Báo xấu

32
lượt xem 5
download

Download Vui lòng tải xuống để xem tài liệu đầy đủ

In this study, panel data analysis is performed to assess not only the Textile Sector which holds an important place in Turkish Economy but also the impact of Research and Development investments of 14 firms, competing in national and international markets in this sector with public securities traded in Istanbul Stock Exchange, on their market prices, net sales and equity capital.

Chủ đề:

Bình luận(0) Đăng nhập để gửi bình luận!

Lưu

Nội dung Text: The relation between R&D expenditures and financial performance of textile firms traded in Istanbul stock exchange (BIST): Evaluation through panel data analysis

International Journal of Management (IJM) Volume 8, Issue 3, May–June 2017, pp.148–155, Article ID: IJM_08_03_016 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=3 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication THE RELATION BETWEEN R&D EXPENDITURES AND FINANCIAL PERFORMANCE OF TEXTILE FIRMS TRADED IN ISTANBUL STOCK EXCHANGE (BIST): EVALUATION THROUGH PANEL DATA ANALYSIS Dr. Cevdet A. KAYALI, Assoc. Prof. Business Administration Department, Celal Bayar University, Manisa, TURKEY ABSTRACT Globalisation has brought a change in the concept of competition for business firms, transforming price competition into a competition for enhancing the quality of non-price good and services, transforming regional competition into global competition, raising brand awareness and also increasing the value added generated by brand equity. This situation led to the diversification of products and shortening of product lifetime depending on costumer behaviours. As a result, the rules determined by this competition increase the significance of Research and Development for product quality, variety and also for corporate competitiveness. In this study, panel data analysis is performed to assess not only the Textile Sector which holds an important place in Turkish Economy but also the impact of Research and Development investments of 14 firms, competing in national and international markets in this sector with public securities traded in Istanbul Stock Exchange, on their market prices, net sales and equity capital. As a result of this study, it is understood that except for share price and equity capital variables, net sales variable produces significant results. It is concluded that there is a positive correlation between intangible fixed assets and net sales. Key words: Textile Sector, Finance Performance, Data Panel Analysis. Cite this Article: Dr. Cevdet A. KAYALI, The Relation Between R&D Expenditures and Financial Performance of Textile Firms Traded in Istanbul Stock Exchange (BIST): Evaluation through Panel Data Analysis. International Journal of Management, 8 (3), 2017, pp. 148–155. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=8&IType=3 http://www.iaeme.com/IJM/index.asp 148 editor@iaeme.com
The Relation Between R&D Expenditures and Financial Performance of Textile Firms Traded in Istanbul Stock Exchange (BIST): Evaluation through Panel Data Analysis 1. INTRODUCTION R&D activity is one of the principal elements enabling a business firm to make innovations, to introduce itself to the outside world and to ensure its competitiveness by means of adding to its knowledge. Because in the current economic climate, survival of firms under fierce competition depends on their ability to make high efficiency production in terms of almost all business functions. What provides high efficiency is inarguably its success in R&D activities. Innovation must be maintained by constantly developing new ideas and methods concerning every aspect of the business so that competition is sustained. Textile and Apparel Industry has been one of the oldest and most important economic activities along with agriculture throughout the human history. Replacement of animal pelts with cotton and wool fabrics increased the significance of textile over time and when James Watt utilised steam power to bring mechanisation and automation in textile industry in the UK; this marked the beginning of a new era. This period which is called the Industrial Revolution brought an increase in outputs and mass production. Industrial Revolution beginning with the textile sector transformed the limited production of looms into mechanized mass production. In the literature on economy of the period, the definition of an industrialized country was closely identified with fabrics. In 20th century, textile and apparel industry became a sector which completely adopted mechanization and automation technologies. The advancement of computer technologies towards the end of 20th century undoubtedly played a major role in this. With this transformation, while the leading countries of the sector gravitated towards computer-aided machine production, textile production shifted to developing countries. In this sense, the textile sector, which was the main element of industrialization process of first-industrializing countries in 18th century, was also the driving force behind economic development of newly-emerging and developing countries in 20th century. On the other hand, constant evolution of computer-assisted manufacturing increased the significance of design and branding, thus, making products with high added value more important. Innovations in textile and apparel sector in terms of products include microfiber kitchen cloths developed by the firm 3M, double-sided wearable product of Colin’s Jeans, smart tracksuits by Nike and Adidas, and increased quality and design in terms of manufacturing. Marketing and presenting products beyond the limits of stores, for example in supermarkets and gas stations, enabled textile and apparel sector to grow consistently, increasing its importance both in national and world economy. R&D activities of business firms constitute an important basis for these developments. In this study, the impact of R&D expenditures on financial performances of 14 firms traded in Istanbul Stock Exchange (BIST) and operating in Turkish textile sector is examined through Panel Data Analysis. 2. HISTORY OF TEXTILE SECTOR Textile became one of the important industries of China in 12th century. For instance, an emperor from Sung dynasty collected 1.17 million rolls of fabric as tax provisions in this century. Chinese textile industry is remarkable especially due to its mechanized features. According to resources, twisting mills in China date back to 1035 A.D. [Clellan, J.E., Dom, H.,2013, p.148] In 1733, John Kay invented a “flywheel” that accelerated weaving and in 1775, the invention of the cylindrical scanning machine made spinning more efficient. With these developments, textile sector reached an important stage. After 1785, the weaving process was finally mechanized with a steam-powered mechanical loom. For this reason, labour productivity in cotton industry increased by 200 times between 1712 and 1812. The number http://www.iaeme.com/IJM/index.asp 149 editor@iaeme.com
Dr. Cevdet A. KAYALI of mechanical looms increased from 2400 to 100.000 in ten years (1823 – 1833). Mechanization of textile production marked the emergence of an industrial civilisation in the UK [Mc Clellan, J.E., Dom, H.,2013, p.332]. As the starting point of Industrial Revolution, textile industry became a principal milestone in history. Textile production also led to rapid advancement in independent technologies (raw materials, side technologies etc.). This process initiated by Industrial Revolution still continues today, and even though producer countries have changed, its magnitude for world economy has only grown further. Textile and apparel sector with its inventions based upon functionality and design is not only a leading sector for national economy thanks to its products with high added value but it also compels business firms to be more efficient in competition. 3. POSITION OF TEXTILE SECTOR IN TURKISH ECONOMY Textile is one of the oldest sectors in Turkey. What immediately comes to mind in the history of this traditional sector are carpet looms of Anatolia, mohair and sof [Note 1] of Ankara, sericulture of Bursa, cotton of Adana and relatively advanced ottoman weaving in Rumelia. While the primary reason behind the halt in textile sector in Ottoman Empire was the increase of imports in the process initiated by Industrial Revolution, the secondary factor was the treaty of commerce signed with the UK. In this way, textile industry lost competitive power and domestic market was dominated by imported products. The levels of production decreased incessantly. With the foundation of the Republic, industrialization accelerated and factories to manufacture consumer goods were established within the frame of State Economic Enterprises. The most significant of them all was Nazilli Basma Fabrikası (Nazilli Printed Cloth Factory) which started operation in 1937 after 2 years of construction [Kuruç,2012, p.369]. The main goals were to reduce foreign dependency and to increase domestic production in textile industry along with enhancing resource productivity in domestic raw materials. In the later years, with the engagement of private sector in producing power, textile sector came to the fore within Turkish economy. By mid-1990s, the total export of textile, apparel and leather industry exceeded 8 billion dollars increasing its share in total Turkish exports to 40%, thus making textile the leading industry in terms of foreign exchange generation. In addition, the textile industry employs about 30% of all workers in the manufacturing industry and generates 17% of the total added value in the entire manufacturing industry [Ansel, 1999, p.183]. In the 2000s, production and exports increased. According to report of Turkish Textile Industry Council in the 8th Turkish Sectorial Economy Forum prepared by the Union of Chambers and Commodity Exchanges of Turkey, in 2014, while Turkey’s textile exports amounted to US $ 15.4 billion, textile imports amounted to US $ 5.9. It is an important sector due to its foreign trade surplus. Among the Top 1000 Industrial Enterprises, there are 102 enterprises of the sector and there are 20 sector companies amongst the Top 500 Companies [TOBB, 2014, p.233]. 4. THE CONCEPT OF COMPETITIVENESS Competitiveness is a layered concept which is defined in three different aspects: firm level, industrial and international competitiveness. Competitiveness at the firm level is defined as the ability of a given firm to make production at a lower cost than its competitors in national or international markets (price and cost competitiveness); the equal or superior position of a firm compared to its competitors in terms of product quality, appeal of the product or the service offered (quality competitiveness); the ability to innovate and invent [Eroğlu; Özdamar, 2006, p.86]. http://www.iaeme.com/IJM/index.asp 150 editor@iaeme.com
The Relation Between R&D Expenditures and Financial Performance of Textile Firms Traded in Istanbul Stock Exchange (BIST): Evaluation through Panel Data Analysis In terms of industrial competitiveness, it refers to an industry which is more productive and efficient compared to its competitors. International competitiveness is that the basket of goods created by the countries in the production process is in demand in other markets and thus contributes to the process of growth and prosperity in the country [Manavgat; Kaya, 2016, p.3]. For example, international competitiveness of Turkish Textile Industry signifies the fact that Turkish textile products are more in demand compared to the products of competing countries. Starting at the firm level, competitiveness may later reach industrial levels and turn into international competitiveness. Just as circular waves created by one sinking stone. One of the key factors that determine the competitiveness of firms both in their own industries and in international markets is the power of technology and the potential to improve existing technology. In this respect, R&D expenditures rise to prominence. Success in R&D expenditures provide firms with rights such as know-how, patents, licences etc. and ensure superior competitiveness compared to their competitors from a legal and economic point of view. 5. CONCEPT OF RESEARCH AND DEVELOPMENT R&D is defined by OECD as any creative systematic activity undertaken in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this knowledge to devise new applications. In addition, according to OECD, research and development is a term covering three different activities. Basic Research: It is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied Research: Applied research is also aimed at acquiring new knowledge. It, however, contains a direct, original practical aim or objective. Experimental Development: It is systematic work, drawing on existing knowledge gained from research and/or practical experience, that is directed to producing new materials, products or devices; to installing new processes, systems and services; or to improving substantially those already produced or installed (OECD, 2002). Overall, R&D expenditures consist of expenses incurred to develop a new product, to make innovations in the existing product, or to improve the production technologies in use. What is important here is to assess whether these expenses are indeed for research and development or not. This is also an important issue in determining the commercial and financial profits of businesses (Gerşil, Soysal, 2012, p.59). According to the intangible asset application standard in Turkish Accounting Standards (TMS 38), while research is defined as an original and planned study undertaken in order to gain a new scientific technical knowledge and understanding; development is qualified as the application of research results or other information in the production, planning or design of new or significantly improved materials, devices, products, processes, systems or services before commencement of commercial production or use[Sağlam; Yolcu; Eflatun, 2015, p.313] While research and development at micro level constitute expenditures and costs undertaken by firms so as to maintain and improve competitiveness, at macro level it also defines the level of technology and technological capability of an individual country in relation to that sector. While large-scale firms incur both product and production based R&D expenditures, small-scale firms make only product based research and development expenses and investments due to undercapitalization. http://www.iaeme.com/IJM/index.asp 151 editor@iaeme.com
Dr. Cevdet A. KAYALI 6. SCOPE OF RESEARCH In this study, the impact of R&D investments in terms of competitiveness (national and international) made between 2010 and 2016 by 14 textile firms with equity shares traded in Istanbul Stock Exchange (BIST) is examined. The names and BIST codes of the firms analysed in the research are provided in Table 1. Table 1 BIST CODE FIRM NAME 1 AKSA AKSA AKRİLİK A.Ş. 2 ATEKS AKIN TEKSTİL A.Ş. 3 ARSAN ARSAN TEKSTİL TİCARET VE SANAYİ A.Ş. 4 BLCYT BİLİCİ YATIRIM SANAYİ VE TİCARET A.Ş. 5 BOSSA BOSSA TİCARET VE SANAYİ İŞLETMELERİ T.A.Ş. 6 DAGI DAGİ GİYİM SANAYİ VE TİCARET A.Ş. 7 DIRIT DİRİTEKS DİRİLİŞ TEKSTİL SANAYİ VE TİCARET A.Ş. 8 HATEK HATEKS HATAY TEKSTİL İŞLETMELERİ A.Ş. 9 KRTEK KARSU TEKSTİL SANAYİİ VE TİCARET A.Ş. 10 LUKSK LÜKS KADİFE TİCARET VE SANAYİİ A.Ş. 11 SKTAS SÖKTAŞ TEKSTİL SANAYİ VE TİCARET A.Ş. 12 SNPAM SÖNMEZ PAMUKLU SANAYİİ A.Ş. 13 YATAS YATAŞ YATAK VE YORGAN SANAYİ VE TİCARET A.Ş. 14 YUNSA YÜNSA YÜNLÜ SANAYİ VE TİCARET A.Ş. **[Note 2]See for translation 6.1. Research Objective Evaluation of the relation between R&D investments made by firms to enhance competitiveness and their share prices, net sales and equity capital indicating ownership rights. 6.2. Research Assumptions The changes in intangible fixed assets are explored in terms of their impact on share prices, net sales and equity capital of various firms, under the assumption that R&D expenditures are registered in accordance with the capitalization requirements set by Turkish Accounting Standards. 7. ECONOMETRIC METHODOLOGY This study draws upon Panel Data Method. Panel Data Method may be defined as colligation of sectional observations over a certain period of time [Baltagi, 2005, p.1]. Within this context, the regression model for the panel data, which contains both the time series and the horizontal cross-sectional data, can be expressed as in equation (1): Yi,t = β0 + β1 x’i,t + εi,t (1) In this model, i=1,2,…,N represent the cross-section units and t=1,2,…,T represent the observation numbers of each cross-section unit, i.e. the time dimension. On the other hand, it refers to the error term of the i’th economic unit in t period. Error terms must be independent and IID (0 and σ2) for all cross-section units and time dimension [Maddala, 2002, p.274]. The unit root properties of the series considered in the Panel Data Method are of great importance. In the first generation panel unit root tests, it is generally based on the dynamic fixed effects model, which resembles ADF (Augmented Dickey-Fuller); http://www.iaeme.com/IJM/index.asp 152 editor@iaeme.com
The Relation Between R&D Expenditures and Financial Performance of Textile Firms Traded in Istanbul Stock Exchange (BIST): Evaluation through Panel Data Analysis Yi,t = μi + τi,t + ρ Yi,t-1 + δi θt + εi,t (2) Here, μi and τi parameters are used to show the fixed effects and trend parameters, respectively. By testing ρ with appropriate methods, the existence of stationarity may be researched. [Selim et al.,2014, p.16]. The presence of the relations between the series investigated for stationarity based upon unit root tests and the series rendered stationary can be analysed by applying the Panel Regression Analysis. 8. APPLICATION The study explores the existence of an association between share prices, net sales and equity capital and intangible assets recognized by R&D expenditures and investments of textile firms in the BIST index. For this purpose, the stationarity of variables was investigated first by performing panel unit root tests and Panel Regression Analysis was applied between equally stationary series. 8.1. Data Set and Variables In this study, intangible fixed assets, share prices, net sales and annual equity data for 14 textile firms in the years between 2010 and 2016 were used. The data were obtained from the BIST index and the logarithm of the variables was taken. 8.2. Application Results In order to examine the relation between the variables of intangible fixed assets, share prices, net sales and equity capital pertaining to textile firms, firstly the stationarity of the series was examined by Levin, Lin, Chu tests of first generation Panel Unit Root tests. Unit root constant and trend results of the level series are shown in Table 2. Table 2 Panel Unit Root Test results Levin, Lin, Chu Variables t Statistics gmdv -16.52* hsf -23.42* ns -5.78* ozs -8.18* Note: Table demonstrates results with constants and trends. (*), (**), and (***) indicate statistical significance at the levels of 1%, 5% and 10%, respectively. According to the results of Levin, Lin, Chu Panel Unit Root Tests in Table 2, it is understood that the series do not contain unit roots in level data, indicating that they are stationary. It is now possible to perform Panel Regression Analysis between stationary series. The result that the regression analysis should be carried out under Fixed Effect is shown in Table 3 Hausman Test results. Table 3 Hausman Test Results Chi-Sq. Test Summary Statistic Chi-Sq. d.f. Prob. Cross-Section Random 9.028060 3 0.0289 The panel regression results estimated under Fixed effects are shown in Table 4 as the Chi-Sq. statistic's probability value is smaller than the 5% significance level. http://www.iaeme.com/IJM/index.asp 153 editor@iaeme.com
Dr. Cevdet A. KAYALI Table 4 Panel Regression Analysis Results Variable Coefficient Std. Error t-Statistic Prob. C -9.953677 5.230359 -1.903058 0.0608 LNHSF 0.157512 0.232415 0.677719 0.5000 LNNS 1.074890 0.325826 3.298970 0.0015 LNOZS 0.142992 0.338417 0.422533 0.6738 Effects Specification Cross-section fixed (dummy variables) R-squared 0.910858 Mean dependent var 12.10140 Adjusted R-squared 0.892091 S.D. dependent var 2.533420 S.E. of regression 0.832214 Akaike info criterion 2.634271 Sum squared resid 52.63610 Schwarz criterion 3.097219 Log likelihood -105.4936 Hannan-Quinn criter. 2.821196 F-statistic 48.53588 Durbin-Watson stat 1.855174 Prob(F-statistic) 0.000000 Upon examining Table 4, it is understood that except for share price and equity capital variables, net sales variable produces significant results. It is concluded that there is a positive correlation between intangible fixed assets and net sales. 9. CONCLUSIONS The textile industry which has been a part of the economic activities since the dawn of civilisation has maintained and strengthened its position in world trade for centuries. The constant change of technology in terms of competition and the legal protection against competitors enable firms that develop technology to have a competitive advantage against their competitors. This advantage lies in short-term and is based upon R & D work that enhances production technology and product specifications. In this study, panel data analysis is performed to assess relations between Research and Development investments between 2010 and 2016 made by 14 leading firms in textile sector competing in Turkish national and international markets (traded in Istanbul Stock Exchange) and their share prices, net sales and equity capital variables. As a result of this study, it is understood that except for share price and equity capital variables, net sales variable produces significant results. It is concluded that there is a positive correlation between intangible fixed assets and net sales. NOTE [1] A type of angora wool [2] 1. (Aksa Acrylic Inc.) 2. (Akın Textile Inc.) 3. (Arsan Textile Industry and Trade Inc.) 4. (Bilici Investment Industry and Trade Inc.) 5. (Bossa Commercial and Industrial Enterprises Inc.) 6. (Dagi Clothing Industry and Trade Inc.) 7. (Diriteks Diriliş Textile Industry and Trade Inc.) 8. (Hateks Hatay Textile Industry and Trade Inc.) 9. (Karsu Textile Industry and Trade Inc.) 10. (Luxury Kadife Industry and Trade Inc.) 11. (Söktaş Textile Industry and Trade Inc.) 12. (Sönmez Cotton Industry Inc.) 13. (Yataş Bed and Quilts Industry and Trade Inc.) 14. (Yunsa Wool Industry and Trade Inc.) http://www.iaeme.com/IJM/index.asp 154 editor@iaeme.com
The Relation Between R&D Expenditures and Financial Performance of Textile Firms Traded in Istanbul Stock Exchange (BIST): Evaluation through Panel Data Analysis REFERENCES [3] Ansal, H. 1999, 75. Yılda Çarklardan Chiplere, İş Bankası Kültür Yayınları Tarih Vakfı, İstanbul, pp 183-185. [4] Baltagi, B.H. (2005). Econometric Analysis of Panel Data. Third Edition, John Wiley & Sons Press. [5] Eroğlu, Ö., Özdamar, G., 2006, Competitiveness Of The Turkish Manufacturing Industry, Akdeniz University, Faculty of Economic and Administrative Sciences Journal 11, Antalya, pp 86. [6] Gerşil, M., M. Soysal (2012). “Ar-Ge Faaliyetlerinin İşletmeler Açısından Önemi”, Dayanışma, Sayı: 117, pp. 54-62. [7] Kuruç, B., 2012, Mustafa Kemal Döneminde Ekonomi Büyük Devletler ve Türkiye, 2. Baskı, İstanbul Bilgi Üniversitesi Yayınları, İstanbul, pp 369. [8] Maddala, G.S., Kim, I.M. (2002). Unit Roots, Cointegration, and Structural Change. Cambridge University Press, Cambridge. [9] Manavgat, G., Kaya, A.A., 2016, The Detyerminants Of The International Competittiveness Of Turkish Manufacturing Industry A Panel Data Analysis, Hacettepe University Journal Of Economics and Administrative Sciences, Vol 34, Issue 3, Ankara, pp 3. [10] Mc Clellan, J.E., Dom, H.,2013, Dünya Tarihinde Bilim ve Teknoloji, çev. Haydar Yalçın, 3. Baskı., Akılçelen Kitapları, İstanbul, pp 148-332. [11] Sağlam, N., Yolcu, M., Eflatun, A.O. (2015). Örneklerle Ufrs Kayıtları. Özbaran Ofset Matbaacılık San. Ltd. Şti, Özel Baskı, Ankara. [12] Selim, S., H.D. Kırgel, O. Çelik, H. Yazıcıoğlu (2014). “Türkiye’de İşsizliğin Sosyo- Ekonomik Belirleyicileri: Panel Veri Analizi”, Bülent Ecevit Üniversitesi Uluslararası Yönetim İktisat Ve İşletme Dergisi, Sayı: 22, Cilt: 10, pp. 1-25. [13] TOBB VIII.Türkiye Sektörel Ekonomi Şurası, wwwtobb.org.tr.,pp 233. [14] Parvesh Kumar, Jimmy Kansal, Dr. Sandeep Singhal, Quality Management System in R&D: A Critical Literature Review. International Journal of Mechanical Engineering and Technology (IJMET), 5 (2), 2014, pp.91–100. [15] Neeti Jain, Jimmy Kansal, Ashwagosha Ganju, Anil Khurana, Pramod Satyawali, The Effect of Implementation of ISO 9001:2008 QMS on the Organizational Performance in an R&D Establishment. International Journal of Management, 4(1), 2013, pp. 47–55. [16] Neeti Jain, Jimmy Kansal, Ashwagosha Ganju, Anil Khurana, Pramod Satyawali, The Effect of Implementation of ISO 9001:2008 QMS on the Organizational Performance in an R&D Establishment. International Journal of Management, 4(1), 2013, pp. 47–55. [17] Anil Khurana, Jamal A Farooquie, Manjit Singh, Jimmy Kansal. Study of Differences among the Management Systems of the ISO 9001 Certified and Non-ISO 9001 Certified Units of Indian Defence R&D Organisation. International Journal of Advanced Research in Management (IJARM), 5(1), 2014, pp. 01–22. http://www.iaeme.com/IJM/index.asp 155 editor@iaeme.com