Page 114 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.80, # 1, 2023, pp. 106-118

ROE = 0.215 - 0.153 (Asset Growth) + 0.107 (Financial Leverage) + 0.015
(Liquidity)+ε

One of these relationships was significant according to significant tests (T-tests and
P-values), which led to the study to determine how investing decisions affected the
performance of companies listed on the New York Stock Exchange. The regression
results indicate that the space allocation value would be 0.215 when Asset Growth,
Financial Leverage, and Liquidity have zero values. It is also proven that, while
keeping other variables (asset growth and liquidity) unchanged, an increase in
financial leverage would lead to a 0.107 rise in ROE. This statistic had a t-value of
4.795 with a P value of at .000 showing that the statistic is significant at 95%
confidence level.

As seen from the table above significance of only the 2nd variable is less than 0.05,
so I only considered this variable for further testing. The variable is ordinal, non –
parametric, and also had more than 2 values, that is why I used Kruskal –Vallis test
as further step in my research.

Kruskal Wallis test

Table 7: Kruskal Wallis test

Profitability

Chi-Square 29.163

df 13

Asymp. Sig. .006
a. Kruskal Wallis Test
b. Grouping Variable: Financial Leverage

Source: Results of the analysis of SPSS 16.0

As seen from the table above significance value is less than 0.05, so the main objective
of my research paper of identification of effect of investment decisions on profitability
of companies listed on New York Stock Exchange is confirmed.
Interpretation of findings
The results demonstrate a correlation between investment decisions, as indicated by
asset growth, financial leverage, liquidity and business profitability. The inference is
that a company becomes more profitable the more new investments it makes because
of the new revenue sources and sources of income.

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