Empirical Investigation of the Factors Affecting Firm’s Performance: a Study Based on Food Sector of Pakistan

The current research empirically identifies the factors significantly affecting the firm’s performance in food sector of Pakistan. The researcher used panel data set. The source of data was “Financial statement analysis of companies (non-financial) listed in KSE for the period 2005 to 2010 which is available at www.sbp.org.pk online. The researcher used one-way fixed effect model due the presence of cross-sectional fixed effect in the regression results. The dependent variable was ROI as a measure of firm’s financial performance while the independent variables were leverage, growth, firm’s size, risk, tax, tangibility, liquidity and non-debt tax shield. In food sector, Long term leverage, size, risk, tangibility and non-debt tax shield are the factors significantly affecting the firm’s financial performance. The food sector should consider the above said factors because these factors significantly increasing or decreasing firm’s financial performance. The findings of the current research are limited and applicable to non-financial sector of Pakistan only. It is not applicable to financial sector due to their difference of capital structure. In addition, the researcher used ROI as measure of firm’s financial performance.