Sustainable Growth of Nonfinancial Firms: An Empirical Examination of Emerging Economies

Muhammad  Mubeen; Mansoor  Ahmed; Athar  Iqbal; Kashif  Arif

doi:10.52633/jemi.v3i2.76

Authors

Muhammad Mubeen Bilkent University, Ankara, Turkey Author
Mansoor Ahmed Muhammad Ali Jinnah University, Karachi, Pakistan Author
Athar Iqbal Iqra University, Karachi, Pakistan Author
Kashif Arif Department of Business and Accountancy, University of Malaya, Malaysia Author

DOI:

https://doi.org/10.52633/jemi.v3i2.76

Keywords:

Sustainable Growth, Higgins Model, Emerging Economies, Random Effect Model

Abstract

The classic model of sustainable growth presented by Higgins is extensively used in accounting and finance research. This research empirically examines this model which was suggested to be underestimated in the existing literature. The investigation was performed using data from 2000 to 2015 for seven emerging countries. To find out the mean difference in growth between secondary equity issuing firms and non-issuing firms, we used an independent sample t-test. To identify the factors affecting differences in sustainable growth and realized growth, regression analysis was performed and a panel of seven countries for sixteen years data was used to estimate the panel regression. The study found the Higgins’ model to be underestimated. One of the main factors of underestimation of the model was found to be the secondary equity issue. This factor was observed to be significant in the case of five countries i.e. Pakistan, India, Korea, Indonesia and Brazil while the same was found insignificant in Turkey and China. Also during the examination, firm-specific factors that are important for the underestimation of the SGR (Sustainable Growth Rate) model were detected which include leverage and size, whereas dividend policy and profitability gave mixed results. Our study suggests that firms with secondary equity issues are more likely to have sustainable growth than firms not having secondary equity issues.

Author Biographies

Muhammad Mubeen, Bilkent University, Ankara, Turkey

Research Scholar, Department of Management, Bilkent University, Ankara, Turkey.

Lecturer, Faculty of Business Administration, Iqra University, Karachi, Pakistan
Mansoor Ahmed, Muhammad Ali Jinnah University, Karachi, Pakistan

Department of Business Administration, Muhammad Ali Jinnah University, Karachi, Pakistan
Athar Iqbal, Iqra University, Karachi, Pakistan

Associate Professor, Faculty of Business Administration (Accounting and Finance), Iqra University, Karachi, Pakistan
Kashif Arif, Department of Business and Accountancy, University of Malaya, Malaysia

Department of Business and Accountancy, University of Malaya, Malaysia

Assistant Professor, Department of Management Sciences, SZABIST, Karachi, Pakistan

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