Financial Performance Analysis using Modified Dupont Model in Malaysian Public Listed Companies

Abstract

The purpose of this study is to conduct a comprehensive assessment of the financial performance of Publicly Listed Companies in Malaysia using the Modified DuPont Model Framework. The motivation behind this investigation stems from the urgent need to evaluate the complex financial landscape of the Malaysian market methodically. The main objective is to provide empirical evidence of the relationship between key financial ratios and the return on equity (ROE), offering valuable insights for investors and stakeholders. The research period spans a decade, from 2013 to 2022, allowing for a thorough analysis of financial trends. The quantitative research method will be employed, utilizing secondary data obtained from Bursa Malaysia, and STATA software will be used for statistical analysis. The research approach has been carefully designed, employing a purposive sampling technique to select 260 companies from various sectors, including consumer goods, industrial products, services, technology and healthcare. Panel-Corrected Standard Errors (PCSE) regression was used to analyze the panel data in order to solve cross-sectional dependency concerns. The results show that interest burden, operating efficiency, asset utilization efficiency, and financial leverage all have a substantial influence on ROE, but tax burden does not. Furthermore, whereas company age increases the impact of financial leverage on ROE, firm size moderates the correlations between asset utilization efficiency and ROE. By showing how financial indicators function as powerful signals for investors, these findings support the Signalling Theory. The study provides financial decision-making implications for investors, policymakers, and corporate management.