Determinant of Return on Assets and Return on Equity and its Industry Wise Effects: Evidence from KSE (Karachi Stock Exchange)

Research Journal of Finance and Accounting, Vol.5, No.15, 2014, pp 148-157

11 Pages Posted: 22 Oct 2014

See all articles by Muhammad Mubeen

Muhammad Mubeen

Bilkent University, Department of Management, Students; IQRA University - IQRA University (Gulshan Campus)

Arsalan Iqbal

University of Karachi

Adnan Hussain

Benazir Bhutto Shaheed University, Lyari, Karachi; University of Karachi - Applied Economics Research Centre

Date Written: December 10, 2012

Abstract

The prime purpose of this research is to find out that from the components of Dupont identity of Return on Equity which component is most consistent or volatile among profit margin, total assets turnover and equity multiplier in Fuel and Energy Sector, Chemicals Sector, Cement Sector, Engineering Sector, Textiles Sector and Transport and Communication Sector of KSE 100 index. The purpose of the study was served by taking data from 2004 to 2012 of 51 companies (falling under six mentioned industries) of KSE 100 as Paradigm of Panel Data. The F-Statistics of One Way ANOVA (Analysis of Variance) show that it is Assets Turnover which significantly varies from industry to industry whereas Equity Multiplier and Profit Margin are not much volatile among indifferent industries. Moreover, Adjusted R Square in Panel OLS Analysis was confirming Industry Effect on Newly established firms that they can have the benefit of profitability if they are from Fuel and Energy Sector, Cement Sector and Transport and Communication Sector whereas others Sectors such as Chemicals Sector, Engineering Sectors and Textiles Sectors does not have that leverage.

Keywords: Profitability, Dupont Identity, Panel Least Square

JEL Classification: G12, G39, C23

Suggested Citation

Mubeen, Muhammad and Iqbal, Arsalan and Hussain, Adnan, Determinant of Return on Assets and Return on Equity and its Industry Wise Effects: Evidence from KSE (Karachi Stock Exchange) (December 10, 2012). Research Journal of Finance and Accounting, Vol.5, No.15, 2014, pp 148-157, Available at SSRN: https://ssrn.com/abstract=2500836

Muhammad Mubeen (Contact Author)

Bilkent University, Department of Management, Students ( email )

Ankara
Turkey

IQRA University - IQRA University (Gulshan Campus) ( email )

Abid Town, Block-2, Gulshan-e-Iqbal
Karachi, Sindh 75300
Pakistan

Arsalan Iqbal

University of Karachi ( email )

University Road
Karachi, PA Sindh 75270
Pakistan

Adnan Hussain

Benazir Bhutto Shaheed University, Lyari, Karachi ( email )

Faqir Mohammad Dura Khan Road,
Near cheel chowk
Karachi, Sindh 75500
Pakistan

HOME PAGE: http://www.bbsul.edu.pk

University of Karachi - Applied Economics Research Centre ( email )

Mail University Road
Karachi University
Karachi, SC Sind 75270
Pakistan

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