The Impact of Macroeconomic Variables on Corporate Performance - What Shareholders Ought to Know?

Oxelheim, Lars

doi:10.2139/ssrn.1010860

Cited by 4 publications

(3 citation statements)

References 28 publications

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“…Furthermore, Mutunga (2014) states that the increased integration and growing macroeconomic fluctuations require paying more attention to the link between the "noise" that these fluctuations represent and a company's own development. Management must eliminate the effects of the "noise" to obtain a clear picture of the long-term sustainable profits and, thus, a picture of how the company's competitiveness can be promoted (Oxelheim, 2003).…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic factors and stock prices in the food and drink industry

Šimáková

Stavárek

Pražák

et al. 2019

BFJ

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Purpose The purpose of this paper is to estimate and evaluate the impact of macroeconomic fundamentals on stock prices of selected food and drink industry stocks during the period of 2005–2015, which saw the global financial crisis and its aftermath. Design/methodology/approach The paper employed correlation analysis and the Johansen cointegration test with the vector error correction mechanism for EU companies operating in the food and drink industry. The paper tested the effects of GDP, inflation and interest rates (IR) on the stock prices of companies from Austria, Croatia, Cyprus, Denmark, Finland, Germany, Ireland, Italy, Lithuania, Poland, Spain and the UK. Findings Based on the results, the authors can see that GDP has a generally positive effect on stock price development. In contrast, the relationship between stock prices and inflation and IR is negative in most cases. Originality/value Despite the fact that a majority of empirical research on companies in the food and drink sector was performed using the microeconomic approach, this paper used the macroeconomic approach and clearly demonstrated the effects of selected macro-variables on stock prices in selected EU markets. Macroeconomic factors shape the company’s performance and could potentially lead to persistent changes in supply and demand conditions in food and drink markets.

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Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic factors and stock prices in the food and drink industry

Šimáková

Stavárek

Pražák

et al. 2019

BFJ

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“…Furthermore, accounting-based FP metrics are regularly used to determine short-term performance, for example, to recognize and reduce unnecessary expenses and unproductive resources, which demonstrate their adequacy for performance assessment (Morrow et al, 2004). Following previous studies (Abdullah, 2018;Aissa & Goaied, 2016;Al-Najjar, 2013M.-H. Chen, 2007aM.-H. Chen, , 2010Cherian et al, 2019;Issah & Antwi, 2017;Oxelheim, 2002;Weerathunga et al, 2019), we use ROA, ROE, and ROCE as proxies for FP of corporate hotels in Sri Lanka.…”

Section: Measures Of Fp Of Corporate Hotelmentioning

confidence: 99%

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

et al. 2020

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This study evaluates the relative effects of economic growth, industrial expansion, and firm-specific and contextual factors on corporate hotel performance in Sri Lanka. We use data from a sample of 29 listed hotels for 7 years from 2012 to 2018 and employ panel regression to uncover the relationship that exists between these variables. The findings suggest that the macroeconomic factors alone can account for a small part of the variance in return on assets and return on equity, and yet that these macroeconomic factors are the key drivers of the overall financial performance. Moreover, the selected macroeconomic factors, together with firm-specific and contextual factors, appear to have a profound impact on hotel performance. More specifically, growth in the number of tourist arrivals and growth in inflation are found to have a positive and significant impact on corporate hotel performance, while the interest rate has a significantly negative effect. Our findings with regard to the impact of growth in gross domestic product (GDP) on hotel performance are inconclusive. Furthermore, our findings reveal that the profitability of Sri Lankan hotels is driven by managerial efficiency, location factors, geographical diversification, and connection to a wider business network.

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“…The macroeconomic environment that surrounds a company is seen by Oxelheim and Wihlborg (1987) as being constituted of a group of four relative prices: exchange rates, interest rates, inflation and spread. According to Oxelheim (2002) the spread refers to the premium charged by companies for the uncertainty related to the market's structure.…”

Section: Introductionmentioning

confidence: 99%

Modeling and forecasting a firm’s financial statements with a VAR – VECM model

Medeiros¹,

Doornik²,

Oliveira³

2011

BBR

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This paper reports the development and estimation of a Vector Autoregressive (VAR) econometric model representing the financial statements of a firm. Although the model can be generalized to represent the financial statements of any firm, this work was carried out as a case study, where the chosen company is Petrobras S/A. The methodology comprises correlation analysis, unit root tests, cointegration analysis, VAR modeling, Granger causality tests, in addition to impulse response and variance decomposition methods. Besides the endogenous financial statement variables, an exogenous variable vector was utilized including the Brazilian GDP, domestic and foreign interest rates, the international oil price, the exchange rate, and country risk. The model's final version is a Vector Error Correction Model (VECM), which takes into account the cointegrating relationships among the endogenous variables. After estimation and validation, the model is used to forecast the firm's financial statements. Estimates for the exogenous variables and dividend forecasts were also used to estimate the firm's market value. The results are apparently robust and might contribute to the field of financial planning and forecasting.

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The Impact of Macroeconomic Variables on Corporate Performance - What Shareholders Ought to Know?

Cited by 4 publications

References 28 publications

Macroeconomic factors and stock prices in the food and drink industry

Macroeconomic factors and stock prices in the food and drink industry

The Relative Effect of Growth of Economy, Industry Expansion, and Firm-Specific Factors on Corporate Hotel Performance in Sri Lanka

Modeling and forecasting a firm’s financial statements with a VAR – VECM model

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