Title: Macro and socio-economic determinants of firms' financial performance: empirical evidence from Indian states

Authors: Faozi A. Almaqtari; Najib H.S. Farhan; Ali T. Yahya; Eissa A. Al-Homaidi

Addresses: Department of Commerce, AMU, Aligarh, 202001, UP, India ' Department of Commerce, AMU, Aligarh, 202001, UP, India ' Department of Business Administration, AMU, Aligarh, 202001, UP, India ' Department of Commerce, AMU, Aligarh, 202001, UP, India

Abstract: This study aims to investigate the impact of macro and socio-economic determinants on firms' financial performance using data of 1,770 firms from 19 Indian states over a period from 2008 to 2015. Firms' performance is considered as the dependent variable and is measured by profit after tax, return on asset and returns on net worth. Macroeconomic determinants include net state value added, capital invested, capital expenditures, per capita income, number of factories and working capital of the selected states. Further, socio-economic determinants contain state's population, level of education, rate of violence, number of workers, per capita power and highways length. The findings reveal that macroeconomic determinants namely; per capita income, capital invested, and number of factories and socio-economic determinants particularly; population, education rate and rate of violence in a state have the major significant impact on firms' performance. However, the other variables are related to some proxies of firms' performance.

Keywords: macroeconomic determinants; socio-economic determinants; financial performance; Indian states.

DOI: 10.1504/IJBEX.2020.108556

International Journal of Business Excellence, 2020 Vol.21 No.4, pp.488 - 512

Received: 07 Dec 2018
Accepted: 03 Feb 2019

Published online: 01 Jul 2020 *

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