Firm Performance Case Study

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Firm’s age is an important attribute on the firm performance which reflects how much the experience of the firm. Kipesha (2013) shows that the higher the firm’s age represent the firm specialize and find the efficient way to increase the productivity. It means that the older firm has more market experience in the operational strategies which can improve the firm performance. Besides that, the older firms have the enough knowledge and experience about the better operational strategies, financing sources, customer needs and the strategies to solve the competition constraints in market. The firm’s age also related to the low failure rate due to their resources allocation, the goodwill created in the market over the years which lead to a better firm performance. According to the studies by Orua (2009), Oteng-abayie, Amanor, & Frimpong (2011) and Cull, …show more content…

2.3.5 Firm Leverage and Firm Performance The study of Alghusin (2015) shows that there is a significant effect of the firm leverage on the firm performance as the firms increase their profitability by reduce their leverage. The firm leverage is important because it may influences the trust of the investors for their investment decision. Since the higher leverage of firm shows the confidence of the managers in future cash flows, but this leads to the problem of underpricing of equity. The firm leverage is increase with the fixed assets but decrease with the profitability. Hence, the higher the firm leverage lead to a poor firm performance. Firms with low leverage lead to a better firm performance if compared with the high leverage firms. During the economic recession, the high leverage of the firm tend to worse performance (Tan, 2012). The higher leverage of the firm may influence the firm performance in term of the lower stock returns. Firm growth is the fundamental factor of the financial distress which influence the firm

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