Abstract:
In this study, we examine firm specific and macroeconomic factors, evaluating which category of factors drives firm performance extending past studies by comparing the two categories to determine which has the upper hand in determining the financial performance of a firm. This study used a sample of 22 non-financial companies from the KSE-30 Index for a period of ten years i.e. 2008-2017. By using descriptive statistics, regression analysis and correlation analysis, this study was able to interpret and analyze the findings. The results of the study reveal that firm characteristics i.e. firm size, liquidity and leverage are significantly related to the financial performance of firms whereas the macroeconomic factors i.e. GDP, interest rate and inflation displayed insignificant results in relation with the financial performance of the firm. To conclude, this study supports the fact that firm characteristics play a greater role in determining the financial performance of firms.
