Corporate Performance Measures and Shareholder Value Creation: Empirical Evidence from the Capital-intensive Sectors of Pakistan
DOI:
https://doi.org/10.22452/IJIE.vol18no1.6Keywords:
Shareholder value, Corporate performance, Market value added, Asset turnover, Liquidity, Dividend payout, Financial leverageAbstract
This study aims to investigate the value creation of capital-intensive firms in
Pakistan. The effect of corporate performance measures, including efficiency, liquidity,
financial leverage, and dividend payout, on shareholder value are examined here. This
study incorporates the capital-intensive sectors of Pakistan which are commonly ignored
and have been severely affected by the financial crisis and economic downturn. In this
study, panel regression models were used to find the impact of corporate performance
measures on shareholder value for the oil and gas, chemicals, and cement sectors listed
on Pakistan Stock Exchange. Data analysis techniques that were used are descriptive
statistics test, correlation, and fixed effect regression on a sample of 46 companies
generated through census sampling for the period of 2013 to 2022. The results reveal
that except for financial leverage, a positive relationship between corporate performance
measures and shareholder value was observed. An increase in total asset turnover,
current ratio, quick ratio, and dividend payout ratio, and a decrease in debt-to-equity
ratio increased shareholder value. This finding show that capital-intensive sectors can
create more value if they enhance their efficiency, liquidity and dividend payout, and
reduce their debts. This will make them more competitive, profitable, and sustainable in
the long run.
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