The Effects of Selected Macro & Micro Economic Variables on Firm Performance for Listed Firms in the ‘Industrial Products’ Sector in Malaysia
Mohammad Ashfaq Ruhomaun1, Mitra Saeedi2, Navaz Nagavhi3
1Mohammad Ashfaq Ruhomaun, Faculty of Business Management, Asia Pacific University, Kuala Lumpur, Malaysia.
2Mitra Saeedi, Faculty of Business Management, Asia Pacific University, Kuala Lumpur, Malaysia.
3Navaz Nagavhi, Faculty of Business Management, Asia Pacific University, Kuala Lumpur, Malaysia.
Manuscript received on 04 February 2019 | Revised Manuscript received on 17 February 2019 | Manuscript Published on 19 February 2019 | PP: 95-101 | Volume-7 Issue-5S January 2019 | Retrieval Number: ES2131017519/19©BEIESP
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Firm performance is considered as an important indicator for investors while making investment decisions since it reflects a firm’s overall financial health. Hence, with business globalization and the fierce competition for market share among the companies, it is fundamental for a firm to maintain a high firm performance. It is an empirical question of how firm performance is influenced by economic factors. Therefore, this study is designed to investigate the effect of selected macro and micro economic variables on firm performance for listed firms in the ‘Industrial Products’ sector in Malaysia. Thus, this study explores and establishes the relationship exchange rate, interest rate, financial distress and derivatives usage as independent variables and firm performance as dependent variable. A dynamic panel data model has been employed in this study which comprises of 196 companies over a time period of 5 years (2012- 2016). The relationship between the variables has been established via GMM as econometric analysis technique. The study reveals that exchange rate has a negative but not significant impact on firm performance. Moreover, both interest rate and financial distress have a negative and significant effect on firm performance. Finally, derivatives usage and an additional interaction term have a positive and significant effect on firm performance.
Keywords: Firm Performance; Exchange Rate; Interest Rate; Financial Distress; Derivatives.
Scope of the Article: Microwave Filter