Open AccessOPERATING PERFORMANCE AND FINANCIAL SUCCESS: EVIDENCE FROM PAKISTANI COMPANIES
Author(s) -
Javed Iqbal
Publication year - 2015
Publication title -
pakistan business review
Language(s) - English
Resource type - Journals
eISSN - 2521-005X
pISSN - 1561-8706
DOI - 10.22555/pbr.v17i1.18
Subject(s) - stock exchange , profitability index , sharpe ratio , panel data , business , market liquidity , operating leverage , market capitalization , leverage (statistics) , capitalization , stock market , return on assets , monetary economics , econometrics , financial economics , finance , economics , portfolio , paleontology , biology , machine learning , linguistics , computer science , horse , philosophy
This paper examines the relationship between risk adjusted performance of stocks measured by Sharpe Ratio and the firm’s operating performance measured by various indicators of profitability, liquidity, leverage, and size (market capitalization). Using fixed effect panel data models this paper seeks to identify which of the operating performance factors are important indicators of stock market performance in Pakistan’s emerging market. In this regard, we have employed the data for 107 companies listed on Karachi Stock Exchange over the period of 12 years from 1996- 2007. The empirical findings show that profitability measures, especially return-on-assets and firm size have a positive and significant effect on firm’s financial success whereas leverage is negatively related to stock market performance.
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