Investors' organizational trust and firm's combined performance: investigating of reciprocal relationship

Document Type : Original Article

Authors

1 PhD Student, Department of Accounting, Faculty of Management and Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran

2 Assistant Professor, Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran

3 Professor, Department of Accounting, Imam Khomeini International University, Qazvin, Iran

10.30495/ijfma.2023.67608.1869

Abstract

Abstract
Investors' organizational trust improves the company's financial performance, on the other hand, the company's performance also affects the investors' organizational trust. Therefore, it is assumed that there is a reciprocal relationship between investors' organizational trust and company performance, The purpose of this research is to investigate this reciprocal relationship. To achieve the research's purpose, the data of 970 observations in the ten year period from 2010 to 2019 has been analyzed based on multivariate regression models and combined data. The findings show that the company's performance is affected by investors' organizational trust, and conversely, investors' organizational trust affects the company's performance. One innovation of this research is the investigating the reciprocal relationship between investors' organizational trust and the company's performance. Another innovation is the creation of a composite index from a total of 9 known indicators for measuring the company's financial performance. These indicators include Tobin's Q, EVA, ROA, ROE, ROS, P/E, IR, IGR, and SGR, using the principal component analysis method.

Keywords

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International Journal of Finance & Managerial Accounting
Volume 9, Issue 35 - Serial Number 35
October 2024
Pages 325-337

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