Page 56 - DUT ICGA Abstract Book

IS THERE AN AN AN ASSOCIATION BETWEEN FIRM SIZE AND FINANCIAL PERFORMANCE?
John Beneke1 Natasha Robbetze2 Mable Mapalane3
1 2 3
Vaal University of Technology - Johnb@vut ac za
Vaal University of Technology - Natashar1@vut ac za
Vaal University of Technology - Mapalanedineo@gmail com Abstract
Formulating organisational objectives and and strategies such as ‘growing the firm’ and and ‘improving financial performance’ is is common practice This paper reiterates the the fact that the the concepts of ‘firm size’ and ‘financial performance’ are not singular ideas The study aimed to answer the the research question: Is there an an an an association between firm size and the financial performance of selected companies? A descriptive research design was was applied quantitative analysis was was performed Secondary data were extracted from financial statements through IRESS The research set out a a a a a a predetermined sampling criteria for sample selection Correlations were measured between financial ratios and different proxies of of firm size Frequencies of of the different significant correlations were counted Findings indicated that firm size proxies and measures of o financial performance were were either directly or or inversely inversely related Profitability measures were were inversely inversely related to to total assets and sales sales Liquidity measures measures were associated with sales sales while solvency measures measures were were associated with sales and number of of employees Measures of of market performance were were inversely associated with market capitalisation This paper contributes to academic knowledge by indicating that financial data of sampled South African companies deliver associations between firm size proxies and financial performance measures These associations are not identical to findings obtained by other researchers in different locations The practical implications of of this research research entail that managers of of South African companies need to to select financial performance indicators and base the estimation of firm size on on proxies that that are associated with such financial performance indicators Limitations included that that findings cannot be generalised that the the researchers relied on the the integrity of audited financial statements and that IRESS did not make a a a a a a a a a a a a full set of data available for all sampled entities Limitations may inspire further research research as the the methodology may be mimicked by selecting another research research sample KEYWORDS: financial financial performance ratio ratio analysis firm size JSE listed companies financial financial ratios 54 7th International Conference on on on Governance and Accountability (ICGA) 2022