The Effect of Firm’s Specific variables on firms' financial performance: A Global Sectorial Analysis
Keywords:
Firms specific, Financial performance, Corporate diversification, Financial structure, Control variables, Multinational firms, International countries, ROE, ROA, Tobin’s q.Abstract
This study investigated the impact of Corporate Diversification, investment, Capital structure, and dividend policies on a firm’s financial performance. The dependent variables taken for measuring the financial performance of the firms included ROE, ROA, and Tobin’s q. The independent variables were taken as investment, dividend as well as capital structure policies. Moreover, corporate diversification variables are represented by product diversification and geographic diversification. Other variables like the size of assets and the age of firms were taken as control. The hypothesis stated that divided policy, investment policy, and corporate diversification have a positive impact on a firm’s financial performances and capital structure has a negative impact on a firm’s financial performance. The data is collected from 10 multinational firms of different sectors. These firms are Bosch Pvt Ltd, Toyota Motors Ltd, Sanofi Aventis Pharmaceuticals Ltd, Pfizer Pharmaceuticals Ltd, Coca-Cola beverages Ltd, Pepsi Ltd, McDonald's Ltd, Nestle Ltd, Reckitt Benckiser Ltd, and Unilever Ltd. The firms’ data are collected from 25 countries. The countries include Argentina, Australia, Austria, Brazil, Canada, China, Ecuador, France, Germany, India, Indonesia, Italy, Japan, Malaysia, Mexico, New Zealand, Peru, Romania, Spain, Switzerland, Thailand, Turkey, UAE, UK, and the USA. The data is examined annually from 2015 to 2019 in panel form. The regression analysis, descriptive statistics, correlation matrix, and ANOVA methods are used for the estimation, interdependency, and correlation between the variables. The results are based on sectorial analysis as the firms belong to the consumer, pharmaceutical, automobile, food, and FMCG sectors.
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