Corporate income tax, asset turnover and Tobin’s Q as firm performance in Pakistan: Moderating role of liquidity ratio

Ahmad, Nisar; Shah, Faisal Nadeem; Ijaz, Faisal; Ghouri, Muhammad Naeem

doi:10.1080/23311975.2023.2167287

Cited by 12 publications

(9 citation statements)

References 25 publications

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“…Beta 4 (β4= -0.244, p= 0.004) shows that if 1% increase in inventory turnover increases, Cement Industries' profitability will decrease by 20%. The results are close to those (Boisjoly et al, 2020;Ahmad et al, 2023;Garg & Meentu, 2022). Source: Author's Compilation corporation to pay off its obligations increases as the ratio increases.…”

Section: Resultssupporting

confidence: 61%

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Sustainable Working Capital and Financial Performance in Cement Industry of Pakistan: An OLS Approach*

Raza,

Tursoy,

Balal

2023

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This research aims to demonstrate for the first time how the Pakistani cement sector's financial health is impacted by sustainable working capital. The cement Industry uses sustainable working capital techniques and practices for magnificent financial outcomes. Considering the importance of these profitable techniques, we practice these in cement firms with a sample size of 25 cement firms listed in the Pakistan stock market (PSX) from 1997-2022. The data is collected from annual reports available on the financial statements. The current ratio and Quick ratio are measured for liquidity. Ordinary Least Square & correlation analysis indicates that the cash conversion cycle (β1= -0.564, p= 0.00), Current ratio (β2= -0.20, p= 0.040), Quick ratio (β3= -0.585, p= 0.000) and Inventory Turnover ratio (β4= -0.244, p= 0.004) have a negative effect on financial performance (Tobin's Q). This study helps policymakers that can handle liquidity Sustainable working capital for the cement industry.

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Section: Resultssupporting

confidence: 61%

“…The average list of cost and cost of goods sold are related. Tobin's Q is widely used for measuring financial performance (Ahmad et al, 2023;Azam, 2022;Cardao-Pito, 2022). It is a ratio that compares a company's market value to the entire value of its net assets.…”

Section: Introductionmentioning

confidence: 99%

Sustainable Working Capital and Financial Performance in Cement Industry of Pakistan: An OLS Approach*

Raza,

Tursoy,

Balal

2023

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“…According to the GRS test, Tobin-q enhanced 5FM was the most productive model on the market. More recently, Ahmad et al (2023) used the Tobin-q as an indicator of firm financial performance and evaluated it as a dependent variable, whereas this study uses Tobin-q as an independent variable that is categorized as firms with undervalued Tobin-q outperform firms with overvalued Tobin-q, and is thus used as an independent variable (undervalued minus overvalued). Dirkx and Peter (2020) used momentum as additional factor augmented with 5FM and observed highly significant findings for German stock market.…”

Section: Literature Reviewmentioning

confidence: 99%

Tobin-Q, Liquidity and Momentum risk-premia: A Demonstration of Weighted Least Squares Regression Approach

Azam

2023

SJOM

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Purpose- The basic purpose of the study is to examine whether Tobin-q, liquidity and momentum risk-premium contributes the explanatory power in terms of explaining portfolio returns in PSX. Design/Methodology- The Weighted Least Square (WLS) regression technique is empirically used to examine the nexus between risk-factor and portfolio returns using PSX dataset. The models provide useful tools for making efficient strategies in the jurisdiction of investments and portfolio constructions. Findings- The study reveals that multidimensional liquidity exhibits weak significant results while Tobin-q and momentum risk-factors demonstrate statistically significant determinants for PSX. Furthermore, WLS regression produces robust coefficient results than OLS regression as except liquidity all the factors exhibit substantially improved results. Practical Implications- The study findings would be useful for stocks and portfolio managers constructing optimal and diversified portfolios while investing in PSX.

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“…The Tobin Q is one of the measures used to assess firm value. The use of Tobin Q as the indicator for firm value or firm financial performance in relation to corporate finance activity has been conducted by (Ahmad et al, 2023;Jonnius and Marsudi, 2021;Hilal and Samono, 2019;Qeisari and Ahmadi, 2016;Sucuahi and Cambarihan, 2016).…”

Section: Literature and Hypothesis Developmentmentioning

confidence: 99%

Determinants of Firm Value as Measured by the Tobin’s Q: A Case of Malaysian Plantation Sector

Ghani¹,

Samah²,

Baharuddin³

et al. 2023

IJARAFMS

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Generally, a firm's value indicates how well it has performed. Firms that perform well will attract more investor trust to invest in their business. Therefore, this study aims to investigate the factors that determine the value of Malaysian plantation sector companies using Tobin's Q and several firm-specific variables. An empirical investigation was done to measure the influence of each size, sales, leverage, return on assets, current ratio and earnings per share ratio, and business liquidity on firm value using panel data procedures. A sample of 30 companies listed under the plantation sectors either under the main board or Ace market on Bursa Malaysia were utilized with the spanning period from 2005-2019. The results demonstrated that the size of the firm, firm sales, firm leverage, liquidity, and return on invested assets were the primary determinants of a corporation's value. Earnings per share, on the other hand, was the only variable discovered to be insignificant in determining the firm's value. The results of this study have implications for companies seeking to improve their firm value.

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Corporate income tax, asset turnover and Tobin’s Q as firm performance in Pakistan: Moderating role of liquidity ratio

Cited by 12 publications

References 25 publications

Sustainable Working Capital and Financial Performance in Cement Industry of Pakistan: An OLS Approach*

Sustainable Working Capital and Financial Performance in Cement Industry of Pakistan: An OLS Approach*

Tobin-Q, Liquidity and Momentum risk-premia: A Demonstration of Weighted Least Squares Regression Approach

Determinants of Firm Value as Measured by the Tobin’s Q: A Case of Malaysian Plantation Sector

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