Examining the Impact of Financial Management on Shareholder Wealth Maximization and Firm Value amidst Global Economic Resilience.
DOI:
https://doi.org/10.47941/jacc.2612Keywords:
Resilience, Multiplier, Strategic Investments, Pecking order, Trade-off theories, COVID-19Abstract
Purpose: This study examines the impact of financial management on shareholder wealth maximization and firm value amidst global economic resilience.
Methodology: Using annual reports from selected listed consumer goods sector on Southern African stock exchanges, data were collected over a nine‐year period (2015–2023) and divided into pre‐COVID (2015–2019) and post‐COVID (2020–2023) periods. Employing advanced statistical techniques, including multiple regression analysis, difference-in-differences estimation, Pearson correlation, variance inflation factors, and unit root tests, the study investigates how specific financial management indicators influence strategic financial investment (SFI).
Findings: The regression analysis reveals that the equity multiplier, earnings per share, and liquidity management are significant positive predictors of SFI, whereas higher leverage exerts a constraining effect. Furthermore, a marked decline in SFI in the post-COVID period, as evidenced by a significant difference-in-differences estimate and Wilcoxon signed-rank test (Z = –6.75, p < 0.001), underscores the adverse impact of economic uncertainty on corporate investment behaviour.
Unique Contribution to Theory, Practice and Policy: These results support theoretical perspectives, such as the pecking order and trade-off theories, which emphasize the importance of internal financing and capital structure optimization in fostering strategic investments. Policy implications include the need for regulatory frameworks that encourage optimal capital structure, improved liquidity standards, and risk management practices to help firms maintain investment capacity during economic stress. The study’s findings contribute to the broader discourse on corporate financial strategy in volatile environments and offer avenues for future research, including investigations into industry-specific dynamics and cross-country comparisons.
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Copyright (c) 2025 Matthew O. Omotoso, Francis A. Oni, Nthoto Rose, Ramalefane
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