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Finance Project Presentation for MBA.pptx
1. 1
Outline
INTRODUCTION
Background
Problem Identification and GAP Analysis
Problem Statement
Research Questions and Objectives
LITERATURE REVIEW
Conceptual Framework
Hypotheses of the study
RESEARCH METHODOLOGY
RESULTS AND ANALYSIS
KEY FINDINGS
EXPECTED OUTCOMES
2. INTRODUCTION
The contemporary business environment is characterized by a level of dynamism that has never been seen
before. This dynamism is evidenced by the rapid growth of technology, globalization, and evolving market
dynamics. Under these circumstances, it is absolutely necessary to have a solid understanding of the elements
that have an effect on the performance of the company in order to maintain competitiveness and guarantee long-
term viability.
The significance of firm-level factors in determining financial results has been recognised by academics for a
considerable amount of time. The agency theory was initially developed by Jensen and Meckling (1976), who
placed an emphasis on the connection between the acts of managers and the interests of shareholders. Research
that was conducted after that, such as that which was conducted by Demsetz and Lehn (1985), investigated the
influence that ownership structure has on the behavior of firms, so shedding light on the function of corporate
governance.
3. Problem Statement
Understanding the cumulative influence of firm-level characteristics, industrial growth, and leverage on financial
performance measures is a complicated topic that needs to be addressed due to the complexity of contemporary
business contexts. Despite the fact that a substantial amount of research has been carried out on individual aspects
such as managerial efficiency, ownership structures, and capital allocation, there is still a significant knowledge gap
regarding how these factors interact with one another to have an effect on important financial indicators such as
Return on Assets (ROA) and Return on Equity (ROE)
4. Research Questions
• What is the impact of managerial efficiency on the firm performance for financial sector of Pakistan?
• What is the impact of Capital allocation on the firm performance for financial sector of Pakistan?
• What is the impact of Market condition on the firm performance for financial sector of Pakistan?
• What is the impact of Industry-specific challenges on the firm performance for financial sector of Pakistan ?
• What is the impact of Leverage on the firm performance for financial sector of Pakistan ?
5. Research Objectives
To examine the impact of managerial efficiency on firm performance for financial sector of Pakistan.
To examine the impact of Capital allocation on firm performance for financial sector of Pakistan.
To examine the impact of Market condition on firm performance for financial sector of Pakistan.
To examine the impact of Industry-specific challenges on firm performance for financial sector of Pakistan.
To examine the impact of Leverage on firm performance for financial sector of Pakistan
6. Significance of the study
Policymakers have the ability to gain useful information that may be used to establish legislation that create an
environment that is beneficial to the growth of businesses. In order to inform policies that are intended to promote
economic stability and competitiveness, it is necessary to have a comprehensive understanding of the complex
relationships that exist between firm-level actions, industrial dynamics, and financial performance.
This research makes a significant contribution to the existing body of knowledge in the academic world by addressing a
gap in the existing literature about the simultaneous investigation of firm-level factors, industrial growth, and leverage.
It lays the groundwork for future research endeavors that was investigate the complex relationships that exist within
the context of changing corporate landscapes.
Investors can reap the benefits of a more detailed understanding of the interaction between firm-level characteristics
and industry conditions, which can assist them in making investment decisions that are more informed. Knowing the
elements that influence return on assets and return on equity can help improve risk assessment and provide direction
for investment plans
7. Literature Review
Sr.
No.
Authors Year of
Publication
Title Findings
1. (Wajid et al, 2022) 2022 The Impact of Leverage on the
Firm Performance: A Case of
Fertilizers Sector of Pakistan
The result showed that a
company's leverage has
significant results with Return on
asset as companies should follow
the return on asset for measuring
the financial performance. While
companies do not show significant
relation with Return on Equity
2. (Bobenič et al, 2020) 2020 THE INFLUENCE OF FIRM-SPECIFIC
FACTORS ON FIRMS´
PERFORMANCE
The results of the study bring
significant managerial implications
suggesting that even in sectors
vulnerable to changes in
the external environment,
effective management of the
firm´s internal factors can lead to
performance gains.
3. (Zbigniew 2014) 2014 Industry and Firm Influences on
Performance: Evidence from
Polish Public Firms
The results of this research show
that industry effects have no
significant influence on companies'
performance while one of the used
models (with ROA as a dependent
variable) showed significant
influence of company effects
8. Theories
Agency Theory
• Agency theory posits that conflicts of interest arise between principals (such as shareholders) and agents
(such as managers) due to divergent goals and information asymmetry.
• In the context of firm performance, agency theory suggests that managerial efficiency plays a crucial role.
Managers may pursue their own interests (e.g., maximizing personal wealth or job security) rather than acting
in the best interests of shareholders.
Resource-Based View (RBV)
• The resource-based view of the firm emphasizes the role of internal resources and capabilities in driving
competitive advantage and firm performance.
• According to RBV, firms with valuable, rare, inimitable, and non-substitutable (VRIN) resources and
capabilities are better positioned to achieve sustained competitive advantage and superior
performance.
10. Hypothesis of the study
• H1; There is significant impact of managerial efficiency on firm performance.
• H2; There is significance impact of Capital allocation on firm performance
• H3; There is significance impact of Market condition on firm performance
• H4; There is significance impact of Industry-specific challenges on firm performance
• H5; There is significant impact leverage on firm performance
11. RESEARCH METHODOLOGY
Research Design : Descriptive research design
RESEARCH PHIPLOPHY: Positivism will serve as the guiding philosophical framework for this
investigation.
RESEARCH APPROACH : Deductive Approach
Primary Data OR SECODNARY : Secondary Data
Sources of Data. Annual Reports and Stock Exchange
12. RESEARCH METHODOLOGY
• Data has been taken from 2018 to 2023
• The major tools used as follows.
Unit Root Test
Descriptive summary
Correlation matrix
Regression
13. RESULTS AND ANALYSIS
t-Statistics Prob. Order of Integration
FP -1.98257 0.009 I (0)
ROA -1.9625 0.001 I (0)
ROE -1.87562 0.012 I (0)
ME -1.80276 0.002 I (0)
CA -1.86573 0.062 I (1)
MC -3.54196 0.000 I (0)
ISC -4.21877 0.000 I (1)
LG -2.26595 0.022 I (0)
Unit Root
Test
14. .DESCRIPTIVE SUMMARY
Variables Mean Std. Dev.
FP 8.918816 8.446153
ROA 5.60275 5.885907
ROE 5.220917 6.231018
ME 6.745083 6.045328
CA 6.0065 6.331287
MC 10.71767 13.52731
ISC 22.82225 48.18076
LG 5.255167 6.011264
15. .CORELATION MATRIX
FP ROA ROE ME CA MC ISC LG
FP 1
ROA -0.328 1
ROE -0.022 0.114 1
ME 0.032 0.133 0.756 1
CA 0.188 0.024 0.754 0.755 1
MC -0.216 0.294 0.455 0.544 0.295 1
ISC -0.191 0.158 0.273 0.347 0.095 0.894 1
LG 0.084 0.110 0.760 0.702 0.805 0.224 0.036 1
16. REGRESSION
Coefficient Std. Error t-Statistic Prob.
C 9.050777 1.638544 5.523669 0.000
MC -0.35122 0.212086 -1.656 0.003
ME 0.053494 0.328725 0.162732 0.071
ISC 0.045995 0.054298 0.847073 0.000
LG -0.27032 0.31372 -0.86167 0.092
CA 0.606395 0.320132 1.894205 0.003
Dependent Variable: Firm’s Performance
Coefficient Std. Error t-Statistic Prob.
C 4.074285 1.110355 3.669352 0.000
MC 0.424912 0.143719 2.956537 0.004
ME -0.09099 0.22276 -0.40845 0.004
ISC -0.08065 0.036795 -2.1918 0.032
LG 0.235754 0.212591 1.108956 0.272
CA -0.30138 0.216937 -1.38927 0.170
Dependent Variable: ROA
17. Coefficient Std. Error t-Statistic Prob.
C 4.074285 1.110355 3.669352 0.000
MC 0.424912 0.143719 2.956537 0.004
ME -0.09099 0.22276 -0.40845 0.004
ISC -0.08065 0.036795 -2.1918 0.032
LG 0.235754 0.212591 1.108956 0.272
CA -0.30138 0.216937 -1.38927 0.170
Dependent Variable: ROA
REGRESSION
19. Key Findings and Conclusion
• H1; There is significant impact of managerial efficiency on firm performance as sig Value is less than
0.05
• H2; There is significance impact of Capital allocation on firm performance as sig Value is less than
0.05
• H3; There is significance impact of Market condition on firm performance as sig Value is less than
0.05
• H4; There is significance impact of Industry-specific challenges on firm performance as sig Value is
less than 0.05
• H5; There is significant impact leverage on firm performance as sig Value is less than 0.05
20. • Limitations of the study
• Data Quality and Availability: The study's conclusions may be constrained by
the availability of data. Data limitations, such as inaccuracies, inconsistencies,
or gaps, can undermine the reliability and validity of the analysis.
• Sample Selection Bias: The study's results may be influenced by sample
selection bias if the sample of firms studied is not representative of the
broader population. For instance, focusing solely on large corporations or
specific industries may limit the generalizability of the findings to other
contexts.
21. Implication of the study
The implications of studying the impact of managerial efficiency, capital allocation, market conditions, industry-specific challenges, and
leverage on firm performance are multifaceted and can provide valuable insights for various stakeholders, including managers, investors,
policymakers, and academics. Some key implications include
Managerial Practices and Training: Understanding how managerial efficiency influences firm performance can guide organizations in
improving leadership practices, decision-making processes, and resource utilization. This insight can inform managerial training programs
and organizational development initiatives aimed at enhancing managerial effectiveness
Strategic Planning and Resource Allocation: Insights into the effects of capital allocation on firm performance can help firms develop
more informed strategic plans and allocate resources more effectively. By identifying and investing in projects with higher potential
returns, firms can improve their competitiveness and long-term profitability.
22. Future Recmmodntion of the study
• Companies must to modify their strategy in accordance with the dynamics of the industry, taking into
consideration the various consequences that changes in the industrial sector have on various performance
measures. This requires keeping an eye on the market conditions, gaining an awareness of the obstacles that are
special to the industry, and modifying business models in order to take advantage of growth prospects
• Given that the study sheds light on the complex influence that leverage has on the success of a company, it is
imperative that firms put in place effective risk management methods. Examining the potential repercussions of
financial leverage and putting risk reduction strategies into action in order to protect against unfavorable
outcomes are both required steps in this process
