Abstract
Financial performance and financial equilibrium are two key aspects that should be monitored by any business manager interested in passing the test of time and overcoming unpredictable events such as economic crises. The organic link between financial performance and financial equilibrium has rarely been studied in the long run for companies listed on the stock market. The present article fills this gap in the literature by examining the degree to which financial performance influenced long-term financial equilibrium using data from 34 major companies publicly traded on the New York Stock Exchange and operating around the world in a wide variety of industries and sectors. The period of analysis spread over a decade (2007Q1–2020Q3) in order to cover two major crises that have marked the dawn of the third millennium and occurred relatively close to one another: the 2008 financial meltdown and the COVID-19 pandemic crisis. By means of panel data modelling, the study showed that the short-term and long-term financial equilibria of these public companies measured by current ratio, quick ratio and debt to equity ratio were significantly impacted by different financial performance indicators. The study addresses various implications of the empirical results and lays out avenues for future research.
Highlights
In order to examine the relationship between the abovementioned financial indicators retrieved from the 34 top companies listed on New York Stock Exchange (NYSE), I considered a battery of methods of analysis that could secure strong empirical results
Starting from the values of the standard deviation, which captures the fluctuation of time series, it was concluded that debt to equity ratio had the largest volatility, followed by current ratio and quick ratio, while operating margin ratio had the smallest volatility
The present study investigated the degree to which financial performance shaped financial equilibrium for a sample of 34 publicly listed companies, ranking first on the New
Summary
Academic Editors: Michael McAleer, Chia-Lin Chang and Wing-Keung Wong. Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Throughout recent history, economic markets have experienced several notable economic and financial crises that impacted at regional or global level, starting with the 1929
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