DOES SIZE MATTER IN DETERMINING FIRMS' PERFORMANCE? A COMPARATIVE ANALYSIS OF LISTED COMPANIES

Abstract

Depending upon the size, different firms possess different capabilities of utilizing their
short term resources, adopt different working capital policies and follow different
corporate governance practices resulting variations in their financial performances.
Proper investigation into the level of production therefore justifies a lot of attention.
This study examines the impact of firms' size on their financial performances using ratio
and regression analyses. Results show that size has a crucial role in determining firms'
performance whereas it has no significant impact on working capital management
efficiency; small firms follow aggressive working capital policy whereas large firms
follow conservative working capital policy and that firms' size negatively affects quality
of corporate governance. It is further found that working capital and corporate
governance practices of small firms are better than those of large firms and that the
performance of large firms is better than small and medium firms primarily because of
their (large firms) size.