IDEAS home Printed from https://ideas.repec.org/a/spr/qualqt/v58y2024i2d10.1007_s11135-023-01696-7.html
   My bibliography  Save this article

Relationship between return on assets and firm value: institutional holdings and firm size as moderators

Author

Listed:
  • Balamuralikrishnan Chakkravarthy

    (Affiliated to Bharathidasan University)

  • Francis Gnanasekar Irudayasamy

    (Affiliated to Bharathidasan University)

  • Rajesh Elangovan

    (Affiliated to Bharathidasan University)

  • Natarajan Rengaraju

    (Affiliated to Bharathidasan University)

  • Satyanarayana Parayitam

    (University of Massachusetts Dartmouth)

Abstract

The present study explores the relationship between return on assets and firm value. Most importantly, the mediating effect of the dividend payout ratio and the moderating effect of institutional investors are examined. The data for this study was collected from secondary sources, which included financial information. The sample consisted of five pharmaceutical companies with 192 data points over a ten-year period and was analyzed using Hayes’s PROCESS macros. The findings of the study indicate that (i) return on assets is positively associated with the firm value and dividend payout ratio, (ii) dividend payout ratio was negatively related to firm value, (iii) the firm’s size moderates the relationship between return on assets and dividend payout ratio, and institutional holdings. The findings support moderating effect of firm size (second moderator) in the relationship between the return on assets and institutional investors (first moderator) and dividend payout ratio and firm value, mediated through dividend payout ratio. This type of moderated-mediation model is novel in the literature on finance. This innovative methodology would be of interest to researchers in finance.

Suggested Citation

  • Balamuralikrishnan Chakkravarthy & Francis Gnanasekar Irudayasamy & Rajesh Elangovan & Natarajan Rengaraju & Satyanarayana Parayitam, 2024. "Relationship between return on assets and firm value: institutional holdings and firm size as moderators," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(2), pages 1217-1233, April.
    • Handle: RePEc:spr:qualqt:v:58:y:2024:i:2:d:10.1007_s11135-023-01696-7
    DOI: 10.1007/s11135-023-01696-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11135-023-01696-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11135-023-01696-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:qualqt:v:58:y:2024:i:2:d:10.1007_s11135-023-01696-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.