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The mediating effects of sustainable growth rate: evidence from the perspective of Shariah-compliant companies

Author

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  • Nur Ainna Ramli
  • Norfhadzilahwati Rahim
  • Fauzias Mat Nor
  • Ainulashikin Marzuki

Abstract

We aim to investigate the sustainable growth rate that mediate the relationship between the firm specific factors and share price performance. The existing literature provides inadequate findings on the relationship between the firm specific factors and share price performance; there is an implicit assumption that this relationship is direct. An alternative perspective that has received less attention in the literature posits that this relationship can be mediated by the sustainable growth rate, especially from the perspective of Shariah-compliant companies. Using STATA software, we conducted structural equation model (SEM) to analyse data from 181 Shariah-compliant companies in Malaysia collected from 2007 to 2016. According to our results, the Shariah-compliant sample meets SEM requirements, such that the sustainable growth rate shows a significant relationship with share price performance. According to mediation effect results, capital structure, dividend policy, profitability and firm size are considered “indirect-only mediator”. These results demonstrate that certain factors influence the sustainable growth rate, including the planning and managing of a firm’s financial and operational activities. The sustainable growth rate is important for helping firms to manage, guide, control and plan their operating and financial strategies. The sustainable growth rate can also improve financial performance and assist managers with financing decisions. The findings of this study can be used as a reference for future studies that examine other aspects of the sustainable growth rate, especially across sectors, to determine how firms can more successfully manage financial and operating activities.

Suggested Citation

  • Nur Ainna Ramli & Norfhadzilahwati Rahim & Fauzias Mat Nor & Ainulashikin Marzuki, 2022. "The mediating effects of sustainable growth rate: evidence from the perspective of Shariah-compliant companies," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2078131-207, December.
    • Handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2078131
    DOI: 10.1080/23311975.2022.2078131
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    Cited by:

    1. Ardi Ahmeti & Alban Elshani, 2024. "The Effect of Profitability as a Mediator in the Relationship between Working Capital Management and the Sustainable Growth of Small and Medium-Sized Enterprises in Selected Western Balkan Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 47-61.
    2. Himanshi Tolani & Jagriti Gupta & Akhil Mishra, 2025. "A Bibliometric Exploration of Sustainability Reporting: Themes, Evolution and Future Direction," Indian Journal of Corporate Governance, , vol. 18(2), pages 349-376, December.
    3. Nguyen Huu Anh & Duong Thi Chi, 2025. "Nonlinear Effects of Inflation and Wage Policy on Firm Sustainable Growth in Vietnam," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 11(2), pages 250-269.
    4. Restiana Ie Tjoe Linggadjaya & Apriani Dorkas Rambu Atahau & Gracia Shinta S. Ugut & Kim Sung Suk, 2025. "The Moderating Role of Capital Adequacy on Bank Specific Characteristics to Sustainable Growth: Evidence From Commercial Banks in Indonesia," SAGE Open, , vol. 15(3), pages 21582440251, July.

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