Impact of Macroeconomic Variables on Financial Performance: Evidence of Automobile Assembling Sector of Pakistan Stock Exchange

Haider, Sufwan; Anjum, Naveed; Sufyan, Muhammad; Khan, Faisal; Ullah, Arif

doi:10.31529/sjms.2018.4.2.6

Cited by 7 publications

(11 citation statements)

References 11 publications

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“…On the other hand, the regression results in Table 2 Section b indicate that all selected macroeconomic variables have a significant impact on a company's return on equity. While an inverse relationship exists between a company's return on equity, inflation and exchange rate (Haider, Anjum, Sufyan, Khan and Ullah, 2018), other independent variables, namely GDP and share price, have a positive long run effect on the company's return on equity (Ndlovu Alagidede, 2018;Ifeacho and Ngalawa, 2014;Soukhakian and Khodakarami 2019). A one percent increase in inflation caused the ROE to decline by 0.635496 percent and a one percent increase in exchange rate leads to a -0.310010 percent decrease in return on equity.…”

Section: Long Run Analysis Resultsmentioning

confidence: 99%

The impact of the selected macroeconomic indicators’ volatility on the performance of South African JSE-listed companies: a pre-and post- Covid-19 study

Benson¹,

Thomas²,

Ganda³

2022

IJRBS

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The influence of macroeconomic variables on aspects of business and the country's economy has been a subject of robust discussion. This study was conducted to identify the effect of macroeconomic variables, namely inflation rate, economic growth, exchange rate and share price, on listed companies in South Africa. The goal was to study the long run and short run effects of macroeconomic volatility on company performance because of the world’s recent pandemic experience. To achieve this objective, the study applied the panel Autoregressive Distributed Lag (ARDL) model on annual panel data from 2010 to 2020 to analyse the short run and long run effects of macroeconomic variables on a company’s performance. The study results suggested a positive impact of economic growth, exchange rate and share price on asset returns, whilst a company's equity return is supported by economic growth and share price in the long run. The short run revealed that none of the independent variables has a sufficiently significant effect to influence a company's performance changes in the short run. Based on the findings, it was recommended that policymakers and economic authorities should introduce and implement strategies that favour and enhance the country's economic growth and stable exchange rate in order to improve company performance. Additionally, given that the company's short-run performance may highly depend on internal factors such as corporate governance, internal policies and business strategies, these decisions should be taken with precaution and a high level of professionalism.

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Section: Long Run Analysis Resultsmentioning

confidence: 99%

The impact of the selected macroeconomic indicators’ volatility on the performance of South African JSE-listed companies: a pre-and post- Covid-19 study

Benson¹,

Thomas²,

Ganda³

2022

IJRBS

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“…In another study, the impact of inflation was studied on the performance of the financial sector through the GMM methodology, the results indicated significant relationship between inflation rate and returns on assets (Boyd et al, 2001). Haider et al (2018) also learned in his research that there was significant relationship between inflation rate and firm's ROA. Which suggests Inflation rate is strongly linked to firm's ROA.…”

Section: Inflation Ratementioning

confidence: 99%

“…These factors are customer's satisfaction, employee satisfaction, firm size, profitability, social performance, environmental performance and increase in market value (Haider et al, 2018).…”

Section: Background To the Studymentioning

confidence: 99%

Untitled

2020

International Journal of Publication and Social Studies

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The effect of firm level factors or industry specific determinants on company performance has been worked on in Pakistan but the researches are mainly focused on textile industries and to an extent agro food industry. This study has been conducted on the effect of macroeconomic factors on firm performance in Pakistan with the focus being on seven industries. 10-year data of 5 companies each in 7 industries in Pakistan (35 companies) was collected through the financial reports, from their official websites. Seven industries were selected the Sugar, Textile, Garments, Automotive, Food, Ceramics and Cement industries. The effect of macroeconomic factors like Inflation Rate, Real Effective Exchange Rate, Foreign direct investment and Unemployment Rate, as well as Unit Labor Cost, were assessed on Return on Assets for each industry using separate regressions. The results indicated that inflation was a significant factor in sugar industry whereas labor unit cost and exchange rate significantly contributed to textile industry firm performance. Garment and auto industry firm performance were heavily influenced by inflation and unemployment. Lastly food and cement industry ROA were greatly influence by rate of exchange and FDI. Whereas these macroeconomic factors had very little impact on Ceramic industry. These results can assist managers, company auditors, lenders, and regulatory bodies to identify businesses that will be affected by macroeconomic changes and use this information to improve future performance. Contribution/ Originality: This study is one of very few studies which have investigated the impact of macroeconomic variables on firm's ROA across different industries in Pakistan. Previous studies, who have studied effect of macroeconomic factors on ROA have mainly focused their work on textile and food industries, this study sheds light to this subject across multiple different industries.

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“…A firm exists as a body that optimizes available scarce resources to produce goods and services to be sold to customers at a profit. Increased or decreased profits indicate the improved or declining financial performance of the firm (Haider, Anjum, Sufyan, Khan and Khan, 2018). Measurement of financial performance as noted by Haider et al (2018) is by profits, size, market share, worker and client satisfaction, a societal and conservational performance where diverse ratios such as return on asset (ROA), liquidity and turnover ratios among others are commonly used to measure the financial status of firms.…”

Section: Background Of the Studymentioning

confidence: 99%

“…Increased or decreased profits indicate the improved or declining financial performance of the firm (Haider, Anjum, Sufyan, Khan and Khan, 2018). Measurement of financial performance as noted by Haider et al (2018) is by profits, size, market share, worker and client satisfaction, a societal and conservational performance where diverse ratios such as return on asset (ROA), liquidity and turnover ratios among others are commonly used to measure the financial status of firms. Challenges of competition in the globalization period have influenced several firms to realize the significance of financial performance that aid the sustainability of businesses.…”

Section: Background Of the Studymentioning

confidence: 99%

Effect of Foreign Exchange Rate on Financial Performance of Listed Manufacturing Companies in Kenya

Mate

Atieno

Kiganda

2022

EJEFR

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The government of Kenya’s broad target for enhancing manufacturing is to increase the manufacturing share of gross domestic product from 8.4% to 15% to create more jobs but the target remains a mirage owing to the poor performance of the manufacturing sector over the years where for instance, sector performance declined to 3.5% in 2019 compared to 4.4% in 2018. Studies globally, regionally and locally have been conducted to establish how macroeconomic variables affect the profitability of companies. However, mixed results have been reported pointing to positive, negative, significant and insignificant effects making it unknown how economic growth, inflation and exchange rates influence the performance of manufacturing firms. The purpose of this study was to establish the influence of Interest rates on the financial performance of listed manufacturing companies in Kenya. The study was guided by; the efficient market hypothesis and arbitrage pricing theory. This study adopted a descriptive correlational research design grounded on panel data spanning 6 years from 2015 to 2020 with a target of 8 listed manufacturing firms. The exchange rate showed a negative influence on performance with coefficients 0.358, 2.764 and -1.532 respectively such that a 1% increase in economic growth and inflation increased performance by 0.358% and 2.764% respectively while a 1% increase in exchange rate decreased performance by 1.532%. The study recommends the formulation of prudent macroeconomic policies including bailouts during pandemics geared towards enhancing the performance of manufacturing firms as envisaged under the Big four agenda and Vision 2030 blueprint. JEL: L60; O24; F31

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Impact of Macroeconomic Variables on Financial Performance: Evidence of Automobile Assembling Sector of Pakistan Stock Exchange

Cited by 7 publications

References 11 publications

The impact of the selected macroeconomic indicators’ volatility on the performance of South African JSE-listed companies: a pre-and post- Covid-19 study

The impact of the selected macroeconomic indicators’ volatility on the performance of South African JSE-listed companies: a pre-and post- Covid-19 study

Untitled

Effect of Foreign Exchange Rate on Financial Performance of Listed Manufacturing Companies in Kenya

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