Comparative analysis of factors influencing return on equity: case of domestic Manufacturing and Financial Service Companies Listed in Dar es Salaam
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Date
2016
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Publisher
University of Dar es Salaam
Abstract
This study analyzed the factors that influenced the Return on Equity for unbalanced panel data of 8 domestic manufacturing and financial companies that are listed on Dar es Salaam Stock exchange for the years 2000 to 2015. The factors analyzed were profit Margin, Total Assets Turnover and equity Multiplier. The study used a multiple linear regression analysis with fixed effect, and the findings indicated that profit Margin and Total Assets Turnover was a positively related to return on Equity while Equity Multiplier was negatively related to return on Equity. Profit margin had the highest correlation coefficient at (1.55) followed by Total Asset turnover at (0.26) and Equity multiplier at (-.04). A hypothesis test was also conducted to identify significance means difference of the factors influencing Return on Equity between manufacturing and financial companies, the results pointed out there was statistically significance differences. Major implication of this study is to provide insight to shareholders of the factors attributing to Return on Equity, so as to aid in sound investment decisions. Moreover to managers so as they can effectively manage business operations so as to maximize shareholder wealth by generating a high Return on equity. To the Academicians, this study adds up an empirical knowledge that aids in understanding theoretical models discussed in this study. The study recommends areas for further research in the future on factors that influence profit Margin, Total Assets Turnover and Equity Multiplier.
Description
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG6024.5.T34M67)
Keywords
Rate of return, Stock exchange, Dar es Salaam
Citation
Moshi, J.S. (2016) Comparative analysis of factors influencing return on equity: case of domestic Manufacturing and Financial Service Companies Listed in Dar es Salaam, Master dissertation, University of Dar es Salaam