9th International Science Congress (ISC-2019).  International E-publication: Publish Projects, Dissertation, Theses, Books, Souvenir, Conference Proceeding with ISBN.  International E-Bulletin: Information/News regarding: Academics and Research

Is Experience or Fund Type Effect the Firm Performance? A Study of KSE Listed Organizations in Pakistan

Author Affiliations

  • 1 GC University Faisalabad, PAKISTAN

Res. J. Management Sci., Volume 2, Issue (8), Pages 1-9, August,6 (2013)

Abstract

This paper examined the impact of firmís age and capital structure on firmís performance of cement sector in Pakistan. In this paper sample of 10 firms of cement sector is taken data duration consists of five years from 2007 to 2011. In this paper return on assets, return on equity, assets turnover, current liabilities to total assets, long term liabilities to total assets, firm age and debt to equity variables are used. Multiple regression models are applied in order to test data. The results of this study show that firmís age has a significant impact on firmís performance. As firms move towards maturity its performance also decreased. Business life cycle theory also supports this statement that firms lose their value with the passage of time. It is analyzed that older firms are highly leveraged. Results of this study show that firms with average age 33 years have 63% debt in their capital structure. Short term debts of such firms are higher and their long term debts are lower. Short term debts are costly as compare to long term debts which ultimately negatively impact on firmís performance. It is also analyzed that there is a negative relationship between firmís age and debt equity ratio. Long term debts have significant impact on performance.

References

  1. Loderer C. and Waelchli U., Firm age and performance. http:/ssrn.com/abstracts, (2010)
  2. Coad A., Segarra A. and Teruel M., Like Milk or Wine. Does firmís performance improve with age?.http://ssrn.com/abstracts, (2010)
  3. Majumdar S., The hidden hand and license Raj. An evaluation of the relationship between age and the growth of firms in India, J. of Business Venturing, 1-36 (1998)
  4. Durand R. and Coeurderoy R., Age, Order of Entry, Strategic Orientation and Organizational Performance, J. of Business Venture, 16, 471-794 (2001)
  5. Casmir O. and Anthony O., Impact of capital structure on the financial performance of Nigerian Firm, Arabic J. of business and Management Review, 1(12), 43-61 (2012)
  6. Modigliani F. and Miller M., Corporate Income Taxes and the Cost of Capital: A Correction, American Economic Review, 53, 433-43 (1963)
  7. Ahmad Z., Abdullah M. and Roslan S., Capital Structure Effect on Firmís performance, Int. review of Business Research Papers, 8(5), 137-155 (2012)
  8. Umar M., Tanveer Z., Aslam S. and Sajid M., Impact of capital structure on firmís financial Performance, Research J. of Finance and Economics,3 (9), 1-12 (2012)
  9. Boodhoo R., Capital Structure and performance of Mauritius listed firms. Retrieved from http/ssrn.com/abstracts, (2009)
  10. Chowdhury A. and Paul S., Impact of capital on firmís value, BEH-Business and Economics Horizons, 3(3), 111-122 (2010)
  11. Amjed S., Impact of financial structure on firmís performance. http://ssrn.com/abstracts, (2010)
  12. Cai J. and Zhang Z., Capital structure dynamics and stock returns, http:/ssrn.com/abstracts, (2006)
  13. Eroitis P., Frangouli Z. and Ventoura Z., Profit Margin and Capital Structure. The J. of Applied Research, 18(2), 85-88 (2011)
  14. Gill A. and Obradovich J., The impact of Corporate Governance and Financial leverage on firmís performance. Int. Research J. of Finance and Economics, 91, 46-56 (2012)