Exploring Financial Performance in terms of Industry Effect: A Worldwide Evidence from 8 Sectors in 10 Stock Exchanges

Abstract

This paper aims at exploring financial performance in terms of industry effect, as it tries to present a worldwide evidence using profitability, liquidity, activity and leverage indicators of 735 listed companies from 8 sectors in 10 stock Exchanges during the period from 2015 to 2022. Testing hypotheses has been conducted using GMM technique, where Z-moments are projected into the column space of instrumental variables. This technique minimizes variance and enhances parameter estimate precision by focusing on Z-moments and applying GLS techniques. Results indicate that each of Retail, Communication and Chemicals sectors seem to have no significant effects on financial performance of companies listed in the selected stock markets. Besides, Construction sector seems to have a positive significant effect on profitability, while Oil sector seems to have a positive significant effect on leverage and Finance sector seems to have a positive significant effect on liquidity. In addition, Transportation sector seems to have positive significant effects on profitability and liquidity and a negative significant effect on activity, while Food sector seems to have a positive significant effect on liquidity. Robustness checks have been conducted for each stock market and supported these results.