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Determinants of Firm¡¯s Financial Performance: An Empirical Study on Textile Sector of Pakistan

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  • Ali Abbas
  • Zahid Bashir
  • Shahid Manzoor
  • Muhammad Nadeem Akram

Abstract

The current study aims to find out the determinants significantly affecting the firm¡¯s financial performance in textile sector of Pakistan for the period 2005-2010. The researcher used panel/longitudinal data set which are created with the help of State Bank of Pakistan¡¯s annual publication named as ¡°Financial statement analysis of companies (non-financial) listed in KSE for the period 2005 to 2010 which is available at www.sbp.org.pk online. The researcher used one-way fixed effect model due the presence of cross-sectional fixed effect in the regression results. The dependent variable was profitability as a measure of firm¡¯s financial performance while the independent variables were leverage, growth, firm¡¯s size, risk, tax, tangibility, liquidity and non-debt tax shield. The firm¡¯s performance in textile sector is significantly affected by Short term leverage, Size, risk, tax and non-debt tax shield while taking long term leverage as first independent variable, the leverage becomes insignificant along with tax factor. The textile sector should consider the above said factors because these factors significantly increasing or decreasing firm¡¯s financial performance. The findings of the current research are limited and applicable to non-financial sector of Pakistan only. It is not applicable to financial sector due to their difference of capital structure. In addition, the researcher used ROI as measure of firm¡¯s financial performance while the future research can have ROA, ROE, EPS etc as firm¡¯s financial performance.

Suggested Citation

  • Ali Abbas & Zahid Bashir & Shahid Manzoor & Muhammad Nadeem Akram, 2013. "Determinants of Firm¡¯s Financial Performance: An Empirical Study on Textile Sector of Pakistan," Business and Economic Research, Macrothink Institute, vol. 3(2), pages 76-86, December.
    • Handle: RePEc:mth:ber888:v:3:y:2013:i:2:p:76-86
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    References listed on IDEAS

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    3. S. M. Amir Shah, 2007. "Corporate Debt Policy Pre- and Post-financial Market Reforms: The Case of the Textile Industry of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 465-478.
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    Citations

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    Cited by:

    1. Abina, Adedigba Praise & Akinola Isilamiyat Esther, 2020. "Capital Structure and Firms’ Performance. A Review of Quoted Nigeria Banks," Journal of Contemporary Research in Social Sciences, Michael Laurence, vol. 2(4), pages 81-88.
    2. Mosab I. Tabash & Eissa A. Al-Homaidi & Anwar Ahmad & Najib H.S. Farhan, 2020. "Factors affecting financial performance of Indian firms: an empirical investigation of firms listed on Bombay Stock Exchange," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 13(2), pages 152-172.
    3. Khan, Muhammad Kamran & Nouman, Mohammad & Imran, Muhammad, 2015. "Determinants of financial performance of financial sectors (An assessment through economic value added)," MPRA Paper 81281, University Library of Munich, Germany.
    4. Olusola E. Olowofela & Abiola M. A. Tonade & Benjamin O. Lisoyi, 2021. "Firm’s Attribute and Performance of Deposit Money Banks," Business & Management Compass, University of Economics Varna, issue 2, pages 207-219.
    5. Ozcan Isik & Umit Firat Tasgin, 2017. "Profitability and Its Determinants in Turkish Manufacturing Industry: Evidence from a Dynamic Panel Model," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 66-75, August.
    6. Julius B. Adesina & Barine M. Nwidobie & Oluwatosin O. Adesina, 2015. "Capital Structure and Financial Performance in Nigeria," International Journal of Business and Social Research, LAR Center Press, vol. 5(2), pages 21-31, February.
    7. Md. Nur Alam Siddik & Sajal Kabiraj & Shanmugan Joghee, 2017. "Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh," IJFS, MDPI, vol. 5(2), pages 1-18, May.
    8. Julius B. Adesina & Barine M. Nwidobie & Oluwatosin O. Adesina, 2015. "Capital Structure and Financial Performance in Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(2), pages 21-31, February.
    9. Kamandulienė Asta & Kulbokas Žilvinas, 2020. "The Assessment of Financial Performance of the Lithuanian Dairy Sector’s Listed Companies," Management of Organizations: Systematic Research, Sciendo, vol. 83(1), pages 73-92, June.

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    More about this item

    Keywords

    Firm¡¯s performance; Textile sector; Return on Investment;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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