The main objective of the present study is to identify the determinants of firm's financial performance (both capital market based and accounting based) in Indian context. In the present study the data of a sample of 233 companies is used to evaluate the financial performance measured in terms of shareholders’ value, growth and profitability using a set of independent variables during the period ranging from 1996 to 2008. The study documents the robust negative presence of leverage in the shareholders’ value creation in Indian corporate sector during the last twelve years, which indicates the acceptance of null hypothesis regarding leverage. The empirical results regarding growth in sales depict age as significant negative determinant leading to acceptance of null hypothesis regarding age. The study exhibits age as significant negative determinant of gross profit margin while size, working capital and leverage as positive determinant. On the other hand, the age and leverage come out to have significant negative effect on net profit margin, another component of profitability. The empirical results have wider implications corporate strategists, policy makers, regulators, fund managers, equity investors and other stakeholders of a firm.
Tobin's Q ratio, Leverage, Gross profit margin, Regression, Size
