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Market Risk and Financial Performance of Non-Financial Companies Listed on the Moroccan Stock Exchange

Author

Listed:
  • Diby François Kassi

    (School of Finance, Dongbei University of Finance and Economics, 217 Jianshan Street, Dalian 116025, China)

  • Dilesha Nawadali Rathnayake

    (School of Finance, Dongbei University of Finance and Economics, 217 Jianshan Street, Dalian 116025, China)

  • Pierre Axel Louembe

    (School of Accounting, Dongbei University of Finance and Economics, 217 Jianshan Street, Dalian 116023, China)

  • Ning Ding

    (School of Finance, Dongbei University of Finance and Economics, 217 Jianshan Street, Dalian 116025, China)

Abstract

This study examines the effect of market risk on the financial performance of 31 non-financial companies listed on the Casablanca Stock Exchange (CSE) over the period 2000–2016. We utilized three alternative variables to assess financial performance, namely, the return on assets, the return on equity and the profit margin. We used the degree of financial leverage, the book-to-market ratio, and the gearing ratio as the indicators of market risk. Then, we employed the pooled OLS model, the fixed effects model, the random effects model, the difference-GMM and the system-GMM models. The results show that the different measures of market risk have significant negative influences on the companies’ financial performance. The elasticities are greater following the degree of financial leverage compared with the book-to-market ratio and the gearing ratio. In most cases, the firm’s age, the cash holdings ratio, the firm’s size, the debt-to-assets ratio, and the tangibility ratio have positive effects on financial performance, whereas the debt-to-income ratio and the stock turnover hurt the performance of these non-financial companies. Therefore, decision-makers and managers should mitigate market risk through appropriate strategies of risk management, such as derivatives and insurance techniques.

Suggested Citation

  • Diby François Kassi & Dilesha Nawadali Rathnayake & Pierre Axel Louembe & Ning Ding, 2019. "Market Risk and Financial Performance of Non-Financial Companies Listed on the Moroccan Stock Exchange," Risks, MDPI, vol. 7(1), pages 1-29, February.
  • Handle: RePEc:gam:jrisks:v:7:y:2019:i:1:p:20-:d:208080
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    References listed on IDEAS

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    2. Mihaela Brindusa Tudose & Valentina Diana Rusu & Silvia Avasilcai, 2021. "Performance Management for Growth: A Framework Based on EVA," JRFM, MDPI, vol. 14(3), pages 1-19, March.
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    4. Jan Dvorsky & Ludmila Kozubikova & Aleksandr Kljucnikov & Eva Ivanova, 2022. "Owners vs. Managers. Disparities of Attitudes on the Business Risk in SME Segment," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(59), pages 174-174.

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