An entropy-based analysis of financial competitiveness of Nordic manufacturing firms
Petrov, Stefan (2021)
Petrov, Stefan
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202103273900
https://urn.fi/URN:NBN:fi:amk-202103273900
Tiivistelmä
Financial competitiveness is an essential part of the health and growth of firms. However, it is a relatively new phenomenon and is not yet well-researched. In this regard, the current study investigates whether the financial competitiveness of Nordic manufacturing firms is affected by stock market performance, financial risk, and corporate governance indicators. Thus, the author has three aims in mind. First, to form an understanding of the phenomena of financial competitiveness. Second, to establish factors affecting financial competitiveness. Third, to test and improve an existing model of evaluating financial competitiveness through entropy.
A quantitative approach shaped the research methodology. The secondary data was accumulated across four accounting phenomena: financial performance, corporate governance, stock market performance, and financial risk exposure. The total sample size extended to 513 firm-year observations from 2013-2018 across the 96 publicly traded manufacturing firms of Finland, Sweden, Norway, and Denmark. The author obtained the stock market data from Nasdaq Stockholm, Oslo Stock Exchange, Nasdaq Copenhagen, and Nasdaq OMX Helsinki. The data related to the accounting and corporate governance variables have been extracted from the sample firms' annual reports. The present study applies the entropy method to the sample to evaluate financial competitiveness at the firm-level. The sample has been further analyzed through ordinary least squares (OLS) multivariate linear regression (MLR) method and principal component analysis (PCA).
By understanding the phenomena of financial competitiveness, the author analytically explored its determinants. Additionally, the author's understanding of financial competitiveness enabled him to improve the existing entropy-based method of evaluating financial competitiveness. Further statistical analysis shows that various performance indicators play an essential role in enhancing firms' financial competitiveness in the manufacturing sector. Moreover, the limitations of the current research were discussed, and recommendations for further research were given.
A quantitative approach shaped the research methodology. The secondary data was accumulated across four accounting phenomena: financial performance, corporate governance, stock market performance, and financial risk exposure. The total sample size extended to 513 firm-year observations from 2013-2018 across the 96 publicly traded manufacturing firms of Finland, Sweden, Norway, and Denmark. The author obtained the stock market data from Nasdaq Stockholm, Oslo Stock Exchange, Nasdaq Copenhagen, and Nasdaq OMX Helsinki. The data related to the accounting and corporate governance variables have been extracted from the sample firms' annual reports. The present study applies the entropy method to the sample to evaluate financial competitiveness at the firm-level. The sample has been further analyzed through ordinary least squares (OLS) multivariate linear regression (MLR) method and principal component analysis (PCA).
By understanding the phenomena of financial competitiveness, the author analytically explored its determinants. Additionally, the author's understanding of financial competitiveness enabled him to improve the existing entropy-based method of evaluating financial competitiveness. Further statistical analysis shows that various performance indicators play an essential role in enhancing firms' financial competitiveness in the manufacturing sector. Moreover, the limitations of the current research were discussed, and recommendations for further research were given.