Journal of Cleaner Production 237 (2019) 117769

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Corporate sustainability on causal financial efficiency model in a

hierarchical structure under uncertainties
Shulin Lan a, Chen Yang b, Ming-Lang Tseng c, d, *
a
School of Economics and Management, University of Chinese Academy of Sciences, Beijing, PR China
b
School of Computer Science and Technology, Beijing Institute of Technology, Beijing, PR China
c
Institute of Innovation and Circular Economy, Asia University, Taiwan
d
Department of Medical Research, China Medical University Hospital, China Medical University, Taichung, Taiwan

a r t i c l e i n f o a b s t r a c t

Article history: This study contributes to (1) the financial report attributes through the measurement-based algorithm
Received 19 April 2019 and uses the financial data of the listed firm to test the validity and reliability of the proposed corporate
Received in revised form sustainability model; (2) the impulse response relationship of the four first-level indicators and provides
21 July 2019
a basis for decision-making to improve the efficiency of a firms' financial operations; and (3) this study
Accepted 23 July 2019
Available online 26 July 2019
applies the primary and secondary data from those listed firms. Still, the financial report is the important
sources for the public to obtain operations and accounting information. Few studies are presented
Handling editor. Prof. Jiri Jaromir Kleme
s financial report with hierarchical and causal interrelationship model in considering the corporate
financial sustainability in expert preferences and firm's secondary data together. This study is presented
Keywords: the four parts financial reporting are structured as 1. Earning ability; 2. Efficiency; 3. Debt; and 4. Asset
Corporate sustainability management. The authenticity and reliability of financial reports are inevitably affect the quality of ac-
Financial efficiency counting information provided and establishes a decision-making index system that affects the quality of
Decision making trial and evaluation the financial efficiency according to the four aspects. This study proposes to apply the decision making
laboratory
trial and evaluation laboratory and analytical network process together to handle the hierarchical and
Analytical network process
causal interrelationship. In addition, prior studies are lacking to address in built on the score data of
Financial sustainability
Entropy weights different influencing indicators using panel data vector auto regression model. The result shows the asset
management capability has a positively impact on the firms' profitability and asset-liability.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction guarantee for the sustainability of a firm. Strategies on financial

As the core of corporate strategy, financial sustainability strat-
egy is the driving force for a firm's development. Most firms'
development track at home and abroad shows that the financial
strategy of a firm and its sustainability are closely linked. The
change of one factor inevitably influence the other. On the one
hand, the financial support for strategy provides the basis for its
sustainability. Financial sustainability helps a firm to properly use
its financial resources and financial information to maintain a sta-
ble flow of funds. Through sound strategies on financial sustain-
ability, a firm properly allocates the resources to avoid financial
risks and operational risks. A sustained financial strategy provides a
* Corresponding author. Institute of Innovation and Circuar Economy, Asia Uni-
versity, Taiwan.
E-mail addresses: lanshulin@ucas.edu.cn (S. Lan), yangchen666@bit.edu.cn
(C. Yang), tsengminglang@asia.edu.tw (M.-L. Tseng).
sustainability of a firm run through its operation, from financing
and investment to the allocation of resources (Wang et al., 2019a,b).
Sound strategies on financial sustainability benefit firms to better
organize different parts from the upper stream to the downstream
and make creative plans focused on big pictures and adapt to
changes of the market.
The concept of sustainability has been adopted by firms and
used in financial affairs with social development in recent years.
Sustainability of corporate finance means the maximization of
corporate value with highest growth rate based on a stable financial
condition without running out its financial resources. Stability is
mainly reflected in the rapid and stable cash flow, fast inventory
turnover and low level of accounts receivable. The notion of
financial efficiency is generated in this context. Financial efficiency
refers to the best performance of a firms' financial affairs through
investment in a period of time under certain technological condi-
tions. Financial efficiency can not only show the firms' ability to

https://doi.org/10.1016/j.jclepro.2019.117769
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
2 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769
allocate resources and pay back its debt, but also its ability in
earning profits and its future potential. It is a comprehensive in-
dicator of a firms' financial condition (Taqi et al., 2018a; Tseng et al.,
2019a; Tseng et al., 2019b). Mostly, the higher the financial effi-
ciency of a firm, the more sustained its financial condition is and
vise versa (Wu et al., 2017; Zhang,2015; Yang et al., 2018). The
assessment of a firms' financial efficiency is conducive to an
objective evaluation of the firms' performance and its health
development. The first way for firms to develop a firm is to improve
the financial efficiency, which contributes to the financing of a firm.
This layes a solid foundation in terms of firm's capital to expand its
production scale. A larger share of market can be obtained and the
firm maintains its sustainability while being more competitive
(Cheng et al., 2013; Chen et al., 2014; Tseng et al., 2016). Hence, this
study focuses on four financial ratio indicators as earning ability,
Efficiency, debt management, and asset management.
Enron and other malignant economic cases showed that the
quality of corporate financial reporting is not only related to the
internal accounting process of a firm, but also with a variety of
external factors. Enron's case taught us a control of financial risks
are necessary to maintain the sustainability of a firm. For example,
accounting principle and external auditing can exert the direct and
indirect influence on the quality of a firms' financial report (Bratten
et al., 2019). The financial risks of firms are difficult to measure due
to the uncertainty of internal and external factors in the financial
activities of firms. The financial risks of firms run through the whole
process of financial activities, and they influence the income and
expenditure of a firm. It might also lead to insolvency. The
improvement of a firms' earning ability, efficiency, debt manage-
ment, and asset management can reduce the financial risks of a
firm. This shows higher financial efficiency means lower level of
risks. The better one firm performs, the lower the risk of default and
bankruptcy. The more financial efficient a firm is, the stronger it
will be in managing the debt, operating, and earning profits. The
lower the probability that the actual income of the enterprise de-
viates from the expected return, the lower the financial risk of the
enterprise (Kirschenmann et al., 2016).
Therefore, it is necessary for scholars to improve their methods
to research problems from both the internal and the external per-
spectives, and analyze the quality of a financial report from more
broaden perspective. The information distortion and the low
quality of financial report be comprehensively treated. Against this
background, the concept of ““financial sustainability” gradually
become an important subject in the accounting research and ac-
counting practice (Wang et al., 2019a,b). The financial analysis in-
dex system is established from the perspective of financial
management. The financial indicators such as solvency, operational
capability and development capability of the enterprise are
analyzed to monitor the risk signals, so as to propose a feasible risk
management strategy and reduce the harm.
The contribution of this study are (1) an establishment of eval-
uation measurement systems is based on decision making trial and
evaluation laboratory and analytical network process (DEMATEL-
ANP) to handle the hierarchial structure and interrelationships
among the proposed factors. Debt management is the first among
these four factors to influence the quality of financial report supply
chain, followed by efficiency, earing ability and asset management.
The study builds evaluation system that affect the financial
reporting supply chain optimization from different aspects; (2)
with the ANP network structure as its basis, combined with the
expert scoring data, the order of weights of the primary indicators
follows DEMATEL's causal analysis's order of influencing the quality
of the financial reporting supply chain (Tseng et al., 2019b). The
order of weights of the indicators obtained from entropy method is
consistent with the results from ANP analysis. The consistency
proves the effectiveness of the DEMATEL-ANP method; (3) the
entropy weight method is used to objectively study the relationship
of these indicators and the impact of them on the efficiency of
financial operation based on the actual operational data of the
different indicators gathered in public firms from 2008 to 2017. The
41 firms' operating data were selected, and the entropy method
was used to identify the importance of each indicator In order to
objectively measure the impact of these indicators on promoting
the financial sustainability.
Finally, the Panel Data Vector Auto regression (PVAR) model is
built on the score data of different influencing indicators, and the
causal relationship of the primary indicators is tested by impulse
response analysis to reflect the dynamic impact of these indicators.
The model can find the relations among first-tier indicators of
financial reporting system. The model analyzes how these factors
influence a firms’ financial management and provides theoretical
support. The model itself can serve as a starting point for firms to
control financial risks. This study identifies the key factors
improving financial efficiency and provides a scientific basis for
promoting the financial sustainability, strengthening the financial
reporting process control, and improving the quality of financial
operation.
2. Literature review
Financial sustainability Martínez-Ferrero and Frías-Aceituno
et al. (2016) required firms to optimize their financial activities
and properly handle various financial relationships under the
constraints of existing scarce resources while keeping its creativity.
In this way, a firm can gain the ability to operate in a financially
sustainable way, gain more profits, promote the sustainable growth
of corporate value. The concept of financial sustainability has
received wide attention. Checherita-Westphal et al. (2014)
emphasized the importance of debt-related fiscal principles and
achieving financial sustainability by maximizing the public debt
ratio of growth through a simple theoretical model. Afonso and
Jalles (2016) assessed the sustainability of public finances in
OECD countries using unit root and cointegration analysis con-
trolling endogenous breaks. They control endogenous breaks and
find it is hard to measure a firms' financial sustainability accurately.
Navarro-Galera et al. (2016) think that the income statement is a
good way to assess financial sustainability because it reveals in-
formation about the three dimensions which are revenues, debt
and services proposed by the International Federation of Accoun-
tants. Coad and Rao (2008) believed that whether the listed firms’
innovation strategy is rational can directly determine their financial
sustainability. A reasonable innovation strategy is beneficial for
listed firms to gain control of products and effectively increase their
market share but it can have an adverse effect on short-term
financial performance. Generally speaking, the existing literatures
are rather limited about studying financial sustainability, and lack
an index system for multi-dimensional evaluation of corporate
financial sustainability.
Financial efficiency is an important indicator to measure
corporate financial sustainability and corporate sustainability
(Grewatsch and Kleindienst, 2017; Tseng et al., 2019b). However,
blindly pursuing financial efficiency can also reduce actual business
efficiency (Edmans et al., 2016). Hence, how to measure the
financial efficiency of firms and maintain the financial sustain-
ability of firms has become a hot topic for practitioners and aca-
demicians. The existing study relies on financial report to analyze
the financial efficiency of listed firms, and uses financial indicators
such as solvency, operational capability, profitability and growth
capabilities to measure a firms' financial efficiency (Jha, 2011; Tseng
et al., 2018b). Some scholars also focus on the impact of non-
 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769
financial indicators on financial efficiency. For example, Curtis et al.
(2015) think that corporate financial information has the largest
impact on asset turnover ratio indicators in accordance with US
General Accounting Acceptable Principles Standards' adjustments.
In other words, adjustments of accounting standards affect firms’
financial efficiency.
Financial risk refers to the risk of bankruptcy due to excessive
financing and poor management which would lead to a firms'
inability to repay its debts (Cantele and Zardini, 2018). Financial
risks are closely related to a firms' debt management ability, prof-
itability, financial operation efficiency, and asset management ca-
pabilities. The level of efficiency determines the financial risk to a
certain extent. Corporate debt capacity refers to the ability of firms
to repay their debts on time. Reasonable financial leverage can
maintain the sustainability of firms. Excessive financial leverage
increase the financial risks of firms (Martellini et al., 2017; Tseng
et al., 2019b). However, due to a variety of factors, firms with low
leverage and high profits may also have higher financial risks
(Giordani et al., 2011). The profitability refers to the ability of a firm
to make a profit in its daily operations (Benitez et al., 2018). This is a
strong guarantee for a firm to pay its principal and interest on time.
The stronger the profitability of a firm and the larger share of
revenue have to pay for the loan principal and interest, so the
financial risk of the firm is negatively correlated with the profit-
ability of the firm. Financial operational efficiency indicator is
mainly used to measure the efficiency of the firms' asset manage-
ment. The efficiency can be measured by commodity turnover rate
and crossover ratio (Martínez-Campillo et al., 2018). The more
efficient a financial operation is, the more profit a firm can make in
a certain period of time (Nguyen et al., 2016), which can improve
the profitability of the enterprise and reduce the financial risk.
Asset management capability is the operational capability of one's
business (Ga ^rleanu and Pedersen, 2018). The stronger the opera-
tional capability is, the more profit a firm can generate from the
investment on certain resources or funds (Hirunyawipada and
Xiong, 2018). In other words, the profitability of a firm also in-
crease, and the timely payment of principal and interest also be a
strong guarantee. The financial risks of a firm will be effectively
controlled. Financial efficiency has a close relationship with
financial risks. The improvement of corporate profitability, financial
operation capability, debt management capability and asset man-
agement capability, which is also known as the improvement of
financial efficiency, is conducive to reducing corporate financial
risks. In addition, financial efficiency is also affected by a corporate
social irresponsibility (Ko €lbel et al., 2017; Tseng et al., 2018b),
macro-economic policy (Fouejieu et al., 2019) and technological
environment (Chae et al. 20 18).
Comprehensive evaluation method, stochastic frontier analysis
method and data envelopment analysis have also been widely used
to measure efficiency. Analytic hierarchy process is used to the
evaluate the independent hierarchical structure, but it is not suit-
able to calculate the weight of indicators that are not independent
of each other. In order to solve this drawback of the analytic hier-
archy process method, Lam and Lai (2015a,b) uses the graph theory
and the matrix tool to analyze the index, calculate the centrality
and cause of each index through the logical relationship between
the indicators and the direct influence matrix. Gabus and Fontela
(1972) build the DEMATEL causal map to determine the logical
relationship of indicators and its importance in the system.
DEMATEL and ANP have been widely used in the establishment of
indicator systems and the identification of key factors. Based on
ANP- quality function deployment which combines ANP with
quality function deployment, Lam and Lai (2015a,b) established an
index system for shipping firms to achieve environmental sus-
tainability. Mavi and Standing (2018) used DEMATEL method to
3
determine the key factors for successful project management, and
used ANP to study the role of each indicator that affects the final
results of the project. DEMATEL-ANP has also been applied in
customer relationship management partner evaluation
(Büyüko € zkan et al., 2017; Tseng et al., 2019b), renewable energy
resources selection, cleaner production (Govindan et al., 2016), etc.
And it has been widely recognized that this model is useful.
Until now, little works, especially that uses quantitative
methods, has been conducted on how to strengthen and optimize
the financial reporting supply chain. This study tries to firstly
identify the key factors and their weights to evaluate the financial
reporting supply chain and then provides guidelines for efficient
improvement. The financial reporting supply chain is a term used to
depict the myriad of players involved in the earning ability, effi-
ciency, debt management and asset management. With many
influencing factors in the financial operation, an index system
would inevitably include key factors that have mutual relationship
and affect each other. So proper methods are needed to evaluate the
indicators’ effects on the quality of the financial efficiency and
financial sustainability.
3. Framework for financial efficiency evaluation
3.1. Evaluation model based on DEMATEL-ANP
There are many factors that directly contribute to the quality of
the above aspects. Those factors should be first found to build an
evaluation index system (Fig. 1). This study identified that satis-
factory solutions are still needed in four aspects of the financial
efficiency: Earning ability, Efficiency, Debt management and Asset
management. This authoritative clue can be used as the starting
point to identify the key factors.
This study found that these factors would likely exert different
degree of influence on each other during the investigation of the
potential factors. In other words, the factors affecting the financial
efficiency may not be totally independent. This study needs to
involve this characteristics, when evaluating the importance of the
factors. Therefore, in the process of constructing the optimization
index evaluation model of financial efficiency, this study considers
the logical relationship between the indicators, and combines the
DEMATEL and ANP methods that emphasize the relevance of the
indicators and use the DEMATEL method to effectively sort out the
complex relationship between the indicators (Tseng et al., 2019a;
b). To determine the relationship and intensity of the primary in-
dicators, then use the ANP method to calculate the relevant weights
of the secondary indicators, so as to enhance the objectivity and
preciseness of the evaluation results.
The ANP method can still provide more objective and precise
evaluation results in the case of non-independent relationships
between indicators. The premise of applying the ANP method is to
scientifically and reasonably clarify the specific logical relationship
between the indicators, and the DEMATEL method can provide a
scientific basis for the determination of these relationships. This
study establishes a fuzzy ANP network structure, and calculates the
limit super-matrix by comparing the judgment matrix to determine
the weight of each indicator in the fuzzy ANP network based on the
logical relationship between the indicators obtained by the
DEMATEL causal map.
3.2. Building the relationship among financial efficiency evaluation
indicators based on DEMATEL
This study takes the four direct factors affecting financial report
quality. The evaluation index system consists of two levels: the
primary indicator (four aspects) and the secondary indicator (the
4 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769

Building inter-indicator Quantitative indicator

Selected evaluation indicators
relationships based on influence based on ANP
Demtel
Establish a direct- Draw the network
relation matrix structure of ANP
Building relationships between Standardized direct- Impact relationship
indicators between indicators Structure judgment
relation matrix
matrix
The comprehensive
influence relation
Quantify the impact of the Calculated
matrix is calculated
indicator weighting super-
matrix
Indicator analysis

Calculated limit
Get the weight and order of the Indicator analysis super-matrix
indicators

Fig. 1. Financial efficiency evaluation model.

indicator that directly affects the primary indicator). If it is negative, it means that the element is greatly affected
by other factors, which is called the cause factor.
(1) Evaluating the direct influencing relationship between the
primary indicators and constructing a directed graph. If in- T ¼ ½tijn  n i; j2f1; 2; 3; :::::; ng (4)
dicator Ui exerts a direct impact on the Uj , draw an arrow
from Ui to Uj and use the numbers 0, 1, 2, 3, 4 to indicate the X
n

strength of the relationship between the indicators on the D¼ tij (5)

j¼1
ray. Among them, 0e4 represents the influence degree of no
effect, low, medium, high and extremely high.
(2) The normalized direct relation matrix X is calculated by X
n
R¼ tij (6)
Equations (1) and (2).
i¼1

X ¼K  A (1)
(5) Based on D þ R, D-R the mapping of the primary indicator
! causality, the relationship between the primary indicators
1 1 and its importance can be clearly identified.
k ¼ min Pn  ; Pn   (2)
max a
j¼1 ij max i¼1 aij
1in 1jn

3.3. Quantify the influence of financial efficiency indicators based

(3) Based on the standardized direct relation matrixX, the
comprehensive influence matrix T is obtained by using
Equation (3).
X
∞
T ¼ X 1 þ X 2 þ X 3 þ :::: ¼ X i ¼ Xð1  XÞ1
i¼1
(4) Indicator analysis. Investigate the indicator tij of T, calculate
the effect degree D, affected degree R and center degree
D þ R and cause degree D-R of each indicator. Among them,
tij indicates the degree of comprehensive impact from in-
dicators j to indicator i. The D is the sum of rows in the
comprehensive impact matrix T, indicating the combined
impact of the indicator on all other indicators. R is the sum of
the columns in the comprehensive impact matrix T, indi-
cating that the indicator is affected by all other indicators.
The sum of D and R of each indicator is called the centrality of
the indicator, indicating the position of the indicator in the
system and its role. The difference between D and R of each
indicator is called the cause degree of the indicator. If D-R is a
positive number, it means that the indicator has a greater
influence on other indicators, which is called the cause factor.
on fuzzy ANP
(1) According to the causal map of the primary indicators of the
financial effciency obtained by DEMATEL, combined with the
actual situation of the secondary indicators, the ANP network
structure is drawn. The ANP network structure consists of a
(3)
control layer and a network layer. The control layer generally
includes a target layer and a criterion layer. The network
layer consists of a set of elements (primary indicators) and
elements (secondary indicators) that are dominated by the
control layer. Peer indicators are independent of each other
and dominate each other.
(2) Construct a judgment matrix. It is assumed that the criteria
of the target G in the control layer are G1、G2、 … 、GM, and
the elements in the network layer are C1、C2、 … 、CN,
where Ci has elements ei1,ei2, …eini (i ¼ 1,2, …,N), there are
elements ejl (j ¼ 1,2, …,N; l ¼ 1,2, …,nj)in Cj. Taking GS(S ¼ 1,2,
…,M)in the control layer as the criterion and the element ejl
in the sub-criteria as the sub-criteria, the other elements in
the element set Ci are compared in pairs with respect to the
importance of ejl using constructing The pairwise compari-
son matrix of elements in Ci relative to ejl under the criterion
GS and the normalized feature vector wi1ðjlÞ ;
wi2ðjlÞ ::::::winiðjnjÞ , that is, the network element sorting
 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769 5

vector. In order to compare the relative importance in the 4.2. Efficiency

pairwise comparison, this study uses the 1e9 scale are used
in this study (Saaty and engineering 2004). (Table 1). Simi- The efficiency ratio is mainly used to measure the efficiency of
larly, a sort vector with respect to other elements can be the firm in asset management, that is, to analyze the effective uti-
obtained, resulting in the following matrixWij. Among them, lization of enterprise resources. Efficiency indicators often reveal
the column vector of Wij is the element ei1,ei2, …,eini influ- some of the problems in the operation of firm assets. Efficiency
ence degree on elements in Cj. refers to the analysis of operation efficiency and turnover of the
(3) Calculate the weighted super-matrix. Combine all the sorting total assets or some assets of the enterprise. The purpose of en-
vectors that interact with each other at the network layer to terprise management is to effectively use various assets to obtain
form a super-matrix W under the control element GS. The the maximum profit. Profits are mainly derived from operating
weighted super-matrix is obtained by normalizing each income, and firms must rely on assets and make use of it to obtain
column, and the sum of the elements of each column in the operating income. The higher the asset turnover rate, the higher the
weighted super-matrix is 1. operation efficiency and the greater the profit. By analyzing the
(4) Calculate the limit super-matrix. That is, the weighted super- efficiency of asset utilization, it is possible to evaluate whether the
matrix is solved by the of K power, and the absolute ordering business revenue of the firm maintains reasonable relationship
K with various operating assets, and to examine the assets utilization
vector is calculated lim W . If the limit is convergent and
k/∞ efficiency of the enterprise. Typical indicators include: Margin of
unique, then the convergence result can be used as the in- safety ratio, Merchandise turnover and Cross ratio.
tegrated weight value for each element.
0 1 4.3. Debt
ðj1Þ ðj2Þ
/ ð jnj Þ
B wi1 wi1 wi1 C
B C Debt management is an important feature of modern firms.
B
Wij ¼ B wi2
ðj1Þ
wi2 ðj2Þ / wi2 ðjnj Þ C
C (7) While firms use debt to obtain the effect of liabilities, they also
B « « « « C
@ A amplify business risks and become financial risks. At the same time,
wini ðj1Þ wini ðj2Þ / wini ð jnj Þ
the liability efficiency is also constrained by factors such as agency
costs and financial constraints. Reasonable determination of the
degree of corporation debt is a problem that must be faced by firms
in debt management. The main indicators are: asset-liability ratio,
4. Evaluation index system for financial effciency
debt to equity ratio, tangible net debt ratio, and interest coverage
optimization
ratio (Wang et al., 2010).

This study selects the indicators for the financial efficiency

4.4. Asset management
optimization from the four aspects of Earning ability, efficiency
Debt management and Asset management based on the actual
The asset management ratio is a measure of the firms' financial
situation of the financial efficiency.
efficiency in asset management, which is an indicator of the firms’
asset turnover. Operational capability management is a general
4.1. Earning ability
term of informationization solutions of manufacturing and enter-
prise informationization for asset-intensive firms. It aims to
Earning ability is the ability of a firm to make a profit. The
improve asset availability and reduce operating and maintenance
earning ability ratio is a comparison of certain resources and output
costs of firms and optimizes enterprise maintenance resources as
(net) profits. Typical indicators are earnings per share, dividends
the core. Through information technology, reasonable arrange-
per share, price-to-earnings ratio, and net assets per share. In
ments for maintenance plans and related resources and activities. It
general, a firms’ profitability involves only normal business con-
is possible to increase revenue, and by optimizing the arrangement
ditions. Although the abnormal business conditions bring benefits
of maintenance resources, the cost can be reduced, thereby
or losses to the firm, this is only an individual result under special
improving the economic efficiency of the enterprise and the market
circumstances and cannot explain the earning ability of the firm
competitiveness of the enterprise by increasing the availability of
(Ohlson and Juettner-Nauroth, 2005). This study excludes when
equipment (Malkiel, 2013). The main indicators included are: in-
analyzing corporation earning ability.
ventory turnover ratio, accounts receivable turnover ratio, oper-
ating cycle.
a. Non-normal items such as securities trading;
In summary, this study establishes a relatively complete finan-
b. Business projects that have been or will be stopped;
cial efficiency optimization index system, showed in Table 2. The
c. Special items such as major accidents or legal changes;
distinguishing feature of this indicator system is that the peer in-
d. Factors such as the cumulative impact of changes in accounting
dicators are not relatively independent, but rather present a logical
standards and financial systems.
relationship of mutual influence and interdependence.

Table 1 5. Application case of financial effciency evaluation model

Meaning of 1e9 scale.
5.1. Determine the relationship between the primary indicators
Importance Degree Scale
based on DEMATEL
i and j is of equal importance (or equivalent) 1
i is slightly more important than j 3
i is significantly more important than j 5 1 Calculate the direct relationship matrix
i is more important (or better) than j 7
i is extremely important than j 9 First, a group of four people will uses the Delphi method to
Median value of the above two adjacent judgments 2,4,6,8 judge the direct influence relationship between the primary in-
Median value of the above two adjacent judgments
dicators and construct a directed graph and transform the directed
6 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769

Table 2
Index evaluation system.

Secondary Indicator

U1 Earning Ability U11 Earnings per share

U12 Dividend per share
U13 Price earnings ratio
U14 Net assets per share
U2 Efficiency U21 Margin of safety ratio
U22 Merchandise turnover
U23 Cross ratio Fig. 3. Direct relation matrix X.
U3 Debt Management U31 Asset-Liability Ratio
U32 Debt to equity ratio
U33 Tangible net debt ratio
U34 Interest coverage ratio
U4 Asset management U41 Inventory turnover ratio
U42 Account receivable turnover
U43 Operating cycle

graph into the form of the matrix, which is the required direct
relation matrix A (as shown in Fig. 2). Fig. 4. Comprehensive influence matrix T.

2 Calculate the normalized direct relation matrix X by Equations

①,② as shown in Fig. 3. Table 3
3 On the basis of obtaining the standardized direct relation matrix Adjusted comprehensive impact matrix (retains 3 decimal points).
X, the comprehensive influence matrix T is obtained by using U1 U2 U3 U4 D DþR D-R
Equation (3) (Fig. 4).
U1 0.252 0.345 0.445 0.418 1.460 3.119 0.200
4 Constructing a causal map U2 0.300 0.217 0.393 0.300 1.210 2.888 0.468
U3 0.637 0.712 0.461 0.637 2.446 4.311 0.581
In order to further analyze the comprehensive influence rela- U4 0.471 0.404 0.567 0.305 1.747 3.406 0.087
tionship between the financial efficiency optimization factors, the R 1.659 1.678 1.865 1.659

influence degree D, the affected degree R and the centrality D þ R

and the cause degree D-R of each factor are calculated as shown in
Table 3. Where D represents the sum of the matrix row elements;
R represents the sum of the matrix column elements; D þ R
represents the position of an indicator in all indicators and the size
of its effect; if D-R is a positive number, it indicates that the in-
fluence of the indicator on other indicators is large, which is called
the cause factor. If the D-R is negative, it means that the element is
greatly affected by other factors, which is called the result factor.
A causal map can be constructed according to D þ R, D-R, where
the arrow points to indicate the extent to which other indicators
affect it.
Fig. 5 presented that U3 (Debt Management) and U4 (Asset
management) are the causal factors, which have a large impact on
the indicators U1 (Earning ability) and U2 (Efficiency), and are the
most fundamental driving factors driving the optimization of

U1 U2 U3 U4
Fig. 5. Causal map of primary indicators.

U1 0 1 2 2 financial efficiency. U1 and U2 are the result factors, which are the
most direct driving factors affecting the optimization of financial
U2 1 0 2 1 efficiency. The more obvious the effect on optimizing the financial

A efficiency from the perspective of the centrality, the greater the

centrality. The effect of each level of indicators on the optimization

U3 3 4 0 3 of financial efficiency is U3, U4, U1, U2 from large to small. More

importantly, through Fig. 5, this study can clearly identify the
impact relationship between each level of indicators, and each level
has internal dependencies, which lays the foundation for the
U4 2 1 3 0 application of ANP method.
Fig. 2. Direct relation matrix A.
 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769 7

5.2. Calculate the relevant weights of indicators at all levels based

on fuzzy ANP

The weight of the indicators will be calculated by applying the

ANP method after determining the relationship between indicators
through the DEMATEL method.

5.2.1. Building a network structure

The primary indicator causal map generated by the DEMATEL
method and combined with the actual situation in the financial
efficiency optimization process, this study draws the ANP network
structure with only the target layer in the control layer (Fig. 6) (see
Fig. 8) (see Fig. 7).

5.2.2. Establish a judgment matrix

The 20 experts were randomly selected. The degree of mutual
influence between the element sets and elements of the pairwise
comparison was judged to construct the judgment matrix accord-
ing to the 1e9 judgment scale., there are many judgment matrices
to be constructed, and the calculation amount is larger since this
study involves 4 element sets and 14 elements. This study uses the
super deicision software to input the judgment matrix of the two
comparisons into the software for calculation in the questionnaire
mode. And the consistency check of the judgment matrix. Table 4
Fig. 7. Unit root test chart.
shows the factor judgment matrix in the U3 element set (Debt
Management) under the element U11 (Earnings per share) criterion.
According to the judgment matrix, the unweighted weight value of

Fig. 6. ANP network structure.

8 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769
Fig. 8. Impulse response of Earning, Efficiency, Debt and Asset.
Table 4
Judgment matrix of U3 element set under the U11 criterion.
U11 U31 U32 U33 U34
U31 1 4 3 1
U32 1/4 1 1/3 1/4
U33 1/3 3 1 1/3
U34 1 4 3 1
C.R. ¼ 0.0312(Consistency is less than 0.1)
each element in the element set U3 can be obtained, and the con-
sistency check result is 0.0312 < 0.1, which satisfies the require-
ment, and the weight is within an acceptable range.
5.2.3. Constructing a limit super-matrix
Select the elements to be judged in turn, repeat the construction
of the judgment matrix and determine its weight. Through calcu-
lation, the unweighted matrix, the weighted super-matrix and the
limit super-matrix can be obtained.
(4) Determine the weight of the indicator
According to the results of the limit super-matrix, the weights of
each evaluation index are determined (as shown in Table 4).
Table 5 presented the most important element set for optimizing
the financial efficiency is U3 Debt management (0.366), U4 Asset
management (0.363), U1 Earning ability (0.144), and U2 Efficiency
(0.127), which is consistent with the order of the primary indicators
obtained in 3.1 based on DEMATEL's scoring data for experts.
The weight ordering of each element can also be obtained from
Table 4 in addition to the weight ordering of the element sets. The
elements that play an important role in optimizing the financial
efficiency are: U42 Account Receivable Turnover (0.152)>U41 In-
ventory turnover ratio (0.144)>U34 Interest coverage ratio (0.118)
>U31 asset liability ratio (0.108))> U32 debt to equity ratio (0.078)
>U22 merchandise turnover ratio (0.087)>U43 operating cycle
(0.067)>U33 tangible net debt ratio (0.062)>U14 net assets per share
(0.047)>U13 price-earnings ratio (0.042)>U23 cross ratio (0.042)>
U11 earnings per share (0.028)>U12 dividend per share (0.027)> U21
Weight operating safety ratio (0.008).
0.105
0.528 5.3. Empirical analysis of firm operation data
0.262
0.105
The 14 operating indicators data of 41 firms from 2008 to 2017
were selected in order to objectively measure the impact of these
indicators on optimizing the financial efficiency. The entropy
weight method is used to determine the weight of each operational
indicator in each year, so as to obtain the average entropy weight
reflecting the importance of the secondary indicator and compare it
with the normalized secondary indicator importance index value
and important order based on DEMATEL-ANP. In order to further
obtain the average entropy weight reflecting the importance of the
primary indicator and compare and test with the primary indicator
importance index value and important order based on DEMATEL-
ANP, the 14 indicators per year are combined by weighted sum-
mation. And again, use the entropy weight method to obtain the
entropy weight and average entropy weight of the four primary
indicators. In order to further test the influence relationship be-
tween the primary indicators, based on the synthesized four-level
index data of 2008e2017 obtained above, the PVAR model was
established, and the mutual influence relationship between them
was analyzed by the impulse response method.
5.3.1. The importance of assessing primary and secondary
indicators based on entropy weighting
The entropy method determines the weight of the indicator
based on the amount of information provided by the observations
of each indicator. The entropy method is a method for determining
the weight of each index according to the amount of information
provided by the indicator data. The idea is that the larger the dif-
ference between the values of the evaluation objects on a certain
indicator, the more important the weight is correspondingly, the
weight of the indicator is determined according to the influence of
the relative change degree of the index on the system as a whole,
 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769 9

Table 5
Indicator weights for financial efficiency optimization.

Primary indicator Secondary indicator A B C D E F Average

U1 Earning ability (0.144) U11 Earnings per share 0.029 0.027 0.028 0.029 0.027 0.029 0.028
U12 Dividend per share 0.027 0.027 0.027 0.028 0.027 0.027 0.027
U13 Price earnings ratio 0.044 0.042 0.042 0.041 0.041 0.042 0.042
U14 Net assets per share 0.047 0.045 0.049 0.047 0.047 0.046 0.047
U2 Efficiency (0.127) U21 Margin of safety ratio 0.008 0.007 0.010 0.008 0.007 0.007 0.008
U22 Merchandise turnover 0.077 0.075 0.075 0.075 0.078 0.083 0.077
U23 Cross ratio 0.042 0.043 0.041 0.042 0.043 0.042 0.042
U3 Debt management (0.366) U31 Asset-Liability Ratio 0.109 0.108 0.108 0.108 0.109 0.106 0.108
U32 Debt to equity ratio 0.079 0.077 0.078 0.079 0.078 0.077 0.078
U33 Tangible net debt ratio 0.063 0.062 0.063 0.062 0.063 0.060 0.062
U34 Interest coverage ratio 0.118 0.120 0.119 0.118 0.118 0.115 0.118
U4 Asset management (0.363) U41 Inventory turnover ratio 0.142 0.144 0.146 0.145 0.143 0.146 0.144
U42 Account receivable turnover 0.154 0.151 0.152 0.151 0.154 0.150 0.152
U43 Operating cycle 0.063 0.073 0.063 0.066 0.066 0.070 0.067

and the index with a relatively high degree of change has a large 5.3.1.4. (4)Calculating the Entropy Value ej under the jth Indicator.
weight. This method is widely used in various fields such as sta- The entropy value ej under the jth indicator can be worked out.
tistics and assessment (Reesor, 2001). According to the degree of mrepresents the number of evaluated objects. When pij ¼ 0 or
variation of each indicator, the weight of each indicator can be pij ¼ 1, pij  lnðpijÞ ¼ 0.
calculated objectively, which provides a basis for comprehensive
evaluation of multiple indicators. The entropy method has strong 1 X m
ej ¼  pij  lnðpijÞ (11)
objectivity and avoids the error caused by the subjective judgment lnðmÞ
i¼1
of the evaluator (Hendi and Sheykhi, 2011).
The analysis of firm operation data based on entropy weight
method is divided into the following steps:
5.3.1.5. (5)Calculating the difference coefficient dj under the jth in-
5.3.1.1. (1)Decision Matrix Setting up. There are m firms partici- dicator. Observe the formula of entropy value, for a certain indi-
pating in the evaluation, and the firms’ operating status has n cator dj, the more similar the variances of vij are, the higher the
evaluation indicators, so the evaluation system consists of m value of ej. Difference coefficient dj can be determined according to
samples and n evaluation indicators. Then form a decision matrix X: the definition of entropy. The high value of dj means the more in-
2 3 formation the corresponding indicator provides, as a result, more
6 x11 x12 ::: x1n 7 weighting should be given to the indicator.
6 x12 x22 ::: x2n 7
X¼6
6 «
7 (8) dj ¼ 1  ej
4 « « « 75
(12)
xm1 xm2 ::: xmn

5.3.1.6. (6)Determining the weightings for each indicator. Then

5.3.1.2. (2)Standardized Decision Matrix。. Because the objectivity
and negativity, measurement units of each indicator are different, it
is unrealistic to use the data directly for calculation. Through
normalization of the decision matrix X to form a standardized
matrix V ¼ ðvijÞm  n. Among them, vij is the normalized value of
Xij. Max (xj)and minðxjÞ are the maximum and minimum values of
the jth indicator.
xij  minðxjÞ
vij ¼
maxðxjÞ  minðxjÞ
5.3.1.3. (3)Weighting of the ith Evaluated Object under the jth Indi-
cator. For a certain indicator j, the bigger the variance of vij means the
more influence the indicator has on the evaluated object, namely
more useful information are provided to measure evaluated object by
the indicator. Entropy can be used to measure how much information
are provided according to the definition of entropy. Under the jth
indicator, weighting of the ith evaluated object is pij 0  pij  1.
vij
pij ¼
P
m used again to obtain the annual entropy weight and average en-
vij
i¼1
calculate the entropy weight of each indicator. n represents the
number of indicators. Results are shown as follows in Table 6:
dj
wj ¼ j ¼ 1; 2; :::; n
P
n (13)
dk
k¼1
For each year's operational data above (cross-sectional data), the
entropy weight of 14 indicators can be obtained by using the above
entropy weight method. Finally, the entropy weight of each year is
(9)
shown in the following table, and the average entropy weight of the
indicator can be seen. The weights and the order of the normali-
zation of the indicators obtained by the ANP analysis are basically
the same. Through the actual firm operation data, it is feasible to
explain the importance of the DEMATEL-ANP method to determine
the importance of the secondary indicators.
In order to further test the weight of the primary indicator
determined by the DEMATEL-ANP method, the second-level indi-
cator included in the primary indicator is weighted for each year's
data, and the weight is the above-mentioned entropy right, and the
firm can be obtained in the year. The scores of the primary in-
dicators are detailed in Table 7, and the entropy weight method is
(10)
tropy weight of the four primary indicators. The results are shown
in the table below. The weights of the normalized primary in-
dicators obtained by the two methods are very close, and the order
10 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769

Table 6
Entropy weights of 14 secondary indicators for 2008e2017.

U11 U12 U13 U14 U21 U22 U23 U31 U32 U33 U34 U41 U42 U43

2017 0.009 0.012 0.017 0.062 0.021 0.141 0.101 0.016 0.081 0.050 0.085 0.140 0.192 0.074
2016 0.015 0.014 0.013 0.048 0.021 0.070 0.048 0.012 0.189 0.034 0.192 0.119 0.161 0.064
2015 0.009 0.009 0.014 0.027 0.006 0.061 0.038 0.015 0.400 0.035 0.111 0.096 0.132 0.047
2014 0.019 0.018 0.005 0.036 0.005 0.088 0.045 0.029 0.016 0.056 0.333 0.128 0.167 0.054
2013 0.023 0.023 0.030 0.071 0.022 0.105 0.046 0.029 0.078 0.061 0.073 0.178 0.201 0.061
2012 0.042 0.040 0.223 0.050 0.005 0.079 0.027 0.027 0.090 0.052 0.005 0.150 0.162 0.049
2011 0.055 0.055 0.017 0.057 0.008 0.101 0.053 0.050 0.013 0.079 0.006 0.207 0.221 0.079
2010 0.026 0.026 0.043 0.045 0.005 0.085 0.047 0.045 0.006 0.077 0.173 0.186 0.166 0.069
2009 0.029 0.011 0.011 0.038 0.005 0.093 0.036 0.043 0.007 0.075 0.095 0.168 0.159 0.230
2008 0.017 0.017 0.014 0.025 0.004 0.073 0.033 0.104 0.018 0.086 0.225 0.134 0.181 0.070
Weight by entropy 0.024 0.023 0.039 0.046 0.010 0.090 0.047 0.037 0.090 0.060 0.130 0.151 0.174 0.080
Weight by ANP 0.028 0.027 0.042 0.047 0.008 0.077 0.042 0.108 0.078 0.062 0.118 0.144 0.152 0.067

is consistent. The order of importance from high to low is U3, U4, U1, Table 8
U2 (see Table 8). Result of Hadri Lagrange multiplier stationarity test.

Variable Difference order Z stationarity

5.3.2. Investigating the influence relation between the primary Earning ability 0 0.7130 6.9603*** ✓
indicators based on the PVAR model (0.2379) (0.0000)
In order to further test the influence relation between the pri- 1 3.0480 1.9939 ✓
(0.9988) (0.9769)
mary indicators, based on the panel data of the four primary in-
Efficiency 0 5.1670*** 5.4724*** 
dicators of 41 firms from 2008 to 2017 obtained above, the data (0.0000) (0.0000)
stability test was first carried out to identify the four variables. The 1 0.0907 2.5355 ✓
stationary order is then studied using PVAR and investigated by the (0.5361) (0.9944)
Debt management 0 5.8899*** 3.0231 
impulse response function and variance decomposition.
(0.0000) (0.0013)
1 2.4352 1.3622 ✓
5.3.2.1. Stationarity test. (0.9926) (0.0866)
Asset management 0 6.3652*** 2.6756 
yit ¼ ri yit1 þ εit (14) (0.0000) (0.0037)
1 3.2922 1.3457 ✓
If jri j < 1, the sequenceyt is said to be wide (trend) stationary, (0.9995) (0.9108)
and if jri j ¼ 1, the sequenceyt includes the unit root, which is an notes: P values in parentheses, *, ** and *** indicate significant significance at 1%,
unstable sequence. There are many methods for stationarity test. 5%e10%,.
There are two common classification methods. One is based on
whether the individual auto-regressive coefficients of the cross-
section are the same in the test. It can be divided into two cate- efficiency debt and asset) is used as Y, that is,Yt ¼
gories: one type assumes that all individuals have the same auto- 0 1
regressive coefficient, that is, all the cross sections, that is, i B earningt C
haveri ¼ r. In this study, the Hadri Lagrange multiplier stationarity B Ddebtt C
Yt ¼ B
B
C
C (15)
test is performed on four variables (Hadri, 2000). The original hy- @ Defficiencyt A
pothesis is that there is no unit root, that is, the variable is stable. Dassett
The test results are shown in the table below. Earning ability is
stable on the horizontal value, while the first-order difference of Then, according to the information criterion, the lag order is
variables Efficiency, Debt management and Asset management are selected to construct the PVAR model.The results of the informa-
stable on the horizontal value. tion guidelines are shown in the table, whether it is MBIC, MAIC or
MQIC indicators, Y is a first-order lag, and the PVAR(1) model is:
5.3.2.2. PVAR model. Based on the above-mentioned panel data
stability analysis, the combination of the four variables of (earning, Yt ¼ rYt1 þ εt (16)

Table 7
Entropy weights for the four primary indicators in 2008e2017. 5.3.2.3. Unit root test of PVAR model. In order to further test
whether the PVAR model is stable (for the stationary process), the
U1 U2 U3 U4
unit root test is used, and the results are shown in the following
2017 0.088 0.656 0.085 0.170 table and the following figure. The four unit roots of the model fall
2016 0.183 0.226 0.197 0.394
2015 0.165 0.205 0.349 0.281
within the unit circle, so the model is stable.
2014 0.136 0.152 0.433 0.279
2013 0.217 0.130 0.346 0.307 5.3.2.4. Impulse response analysis. To describe the effect of unit
2012 0.214 0.138 0.386 0.261
variations of one variable in the model on other variables in the
2011 0.190 0.206 0.400 0.204
2010 0.296 0.147 0.360 0.197 system, based on the existing PVAR(1) model, an impulse response
2009 0.341 0.169 0.323 0.166 model (IRF) is used to establish an impulse response analysis model
2008 0.400 0.150 0.268 0.183 in order to study the response of other variables in the later stage
Weight by Entropy 0.223 0.218 0.315 0.244 after four variables are affected by one unit standard deviation.
Weight by ANP 0.144 0.127 0.366 0.363
Each row in the figure below shows the effect of the unit change of
 S. Lan et al. / Journal of Cleaner Production 237 (2019) 117769
one variable on other variables. Each column indicates that a var-
iable is affected by the unit change of other variables.
After the earning index was affected by a standard deviation of
efficiency at the initial stage, the index gradually increased from the
zero, and the positive reaction effect was strengthened from the
beginning to the second period, rising to 0.0089 at the end of the
first period when the instantaneous effect of the second period
reached its maximum. This positive effect will show a downward
trend after the second phase. When affected byDasset, the index
earning gradually rises from the value of 0 and reaches the
maximum value of 0.011 in the second phase, and then gradually
shows a downward trend, and the positive effect gradually ap-
proaches zero.
The earning impulse response by the Ddebt reaches the
maximum negative effect of 0.012 in the first phase, after which
the negative effect will show a downward trend but still with a
negative effect until the value reaches zero after the forth phase.
The positive effect after the fourth period is not obvious, close to
zero value. In general, the rising indicators of efficiency and assets
will lead to a short-term increase in the firms’ earning indicator. But
there can be a negative effect on the earning indicators when it is
affected by the debt in short-term, and the positive effect will not
be obvious in the long run.
After the initial positive impact on earning and Dasset on the
standard deviation, the indexDefficiency shows a mild upward
trend with the positive effect on the indicator at the early stage, and
both of them have the largest positive effect in the first period,
which are 0.012 and 0.013. After that, this positive effect shows a
trend of decreasing gradually. In the long run, the increase in the
firms' asset management and profitability indicators can decrease
operational efficiency. Similarly, when the efficiency has been
affected by the indicatorDdebt, the trend of maintaining the initial
period is to maximize the positive effect in the first period, which is
0.015. After that, the positive effect is gradually decreased, and the
second stage is the fastest. It shows that the increase of the firms’
debt index will also enhance operational efficiency to a certain
extent and cannot increase firm efficiency simply by relying on the
reduce of the corporation debt in the short term.
At the beginning, Ddebt showed a negative effect after it was
positively impacted by earning, and Dasset. Among them, when it
was affected by earning, Ddebt showed a negative effect in the
initial stage and reached a maximum of 0.039 in the first period,
after which the negative effect showed a trend of increasing
gradually, and gradually came close to zero in the long run. The
indicator Ddebt began to show a trend of increasing from the
beginning figure 0.061 value but still has a positive correlation
after it was influenced by the Defficiency in the long-term. When
affected by the Dasset; the indicator Ddebt continues to decrease
from the 0 value, and the maximum instantaneous negative effect
in the first period is 0.062, after which the negative effect de-
creases gradually and tends to zero. This shows that the asset
management and the ability to earn profits of a company are
negatively correlated with high debt rate in the short run. But in the
long term, they have positive correlation.
After the index Dasset was positively impacted by a standard
deviation of Defficiency at the beginning, it began to show a trend
of decreasing from the beginning at the highest value of 0.049, and
gradually approached the value of 0 in the sixth period. The indi-
cator Dasset showed a similar trend as the impulse response of the
indicatorDdebt and earning: The Dasset indicator reaches the
positive instantaneous effect at the first stage, the maximum of
0.007 and 0.004. The downward trend will gradually approach zero
in the long run. It shows that the increase of the liabilities and firms'
profitability will have a negative impact on firms' asset in the long
term, but in the short run it will help improve the firms' asset level
11
and optimize the firms’ asset structure.
5.4. Discussions and findings
Based on DEMATEL, four primary indicators have been estab-
lished, and the order of influence of these four indicators on the
quality of financial efficiency is: U3, U2, U1, U4. Based on the ANP
network structure, combined with the expert scoring data, the
order of weights of the primary indicators is consistent with the
order of influence of DEMATEL's causal analysis on the quality of
the financial efficiency and financial sustainability.
Based on the actual operational data of the 14 indicators gath-
ered from 41 firms in 2008e2017, the entropy weight method is
used to objectively test the relationship among these indicators and
the impact of these indicators on the quality of financial operation
efficiency. The average weight of each of the 14 indicators. The
order of weights of the indicators obtained from the ANP analysis is
consistent. The weighted scores of the four primary indicators of 41
firms in 2008e2017 are consistent with the order of the primary
indicators based on DEMATEL's scores for expert scoring data and
the order of weights of the primary indicators obtained by ANP
analysis. The above points verify the effectiveness of the DEMATEL-
ANP method. The model analyzes the relationship between the
influencing factors in the firms' financial management, extracts the
cause indicators from it, and provides theoretical support and
starting point for controlling financial risks.
The PVAR model is constructed, and the causal relationship
between the primary indicators is tested by impulse response
analysis to reflect the dynamic impact between the indicators
based on the score data of the primary indicators. The results show
that:
1) The asset management capability (Dasset) of the first phase of
lag has a positive and significant impact on the firms' profit-
ability and efficiency in short term. At the same time, from a
long-term perspective, the improvement of asset management
will lead to higher liability of business operations.
2) Following the initial impact of the standard deviation, the in-
dicator Ddebt has a negative effect on the earning indicator in
the short term. But in the long run, the high debt ratio is
negatively related to the firms' asset management and opera-
tional efficiency.
3) The indicatorDefficiency exert a positive influence on earning in
the short term and the earning indicator shows a trend of rising
first and then decrease gradually, but the value is still above 0. In
the long run, the improvement of the firms' operational effi-
ciency has reduced firms' asset management and profitability.
At the same time, the improvement of operational efficiency and
the firms' debt level have a positive correlation.
4) Following the initial impact of the standard deviation of indi-
cator earning, the indicator Dasset has a significant upward
trend in the early stage, and the indicator Defficiency also shows
a significant positive effect in the short run. It shows that there is
a positive correlation between profitability indicators and asset
indicator in the short term. The rise of profit indicators lead to
the decrease of efficiency and asset management indicators in
the long run. However, for the debt indicator, there is a negative
effect at the beginning, and in the long run, the two are posi-
tively correlated.
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