Strategic Financial Analysis for Sustainable Business Growth in Emerging and Developed Markets

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@article{1722822,
      author = {Israt Jahan, Nourin Jahan, Mohammad Nurul Islam, Rasheda Yasmin, Mohammad Mohibul Alam},
      title = {Strategic Financial Analysis for Sustainable Business Growth in Emerging and Developed Markets},
      journal = {Iconic Research And Engineering Journals},
      year = {2022},
      volume = {6},
      number = {2},
      pages = {447-456},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1722822.pdf},
      abstract = {There is a growing recognition of the part that strategic financial analysis has to play in underwriting sustainable growth, be it in an emerging or a developed market. By its nature, this is the purposeful application of analytical frameworks and data to shape business strategy as opposed to simply putting historical results on paper. And while its role is becoming more central, one must acknowledge that firms in these two market types are operating in structurally dissimilar financial environments.

To address this, the present paper puts forward an integrated two-lever framework for such analysis. It draws on the empirical record regarding firm valuation and environmental, social, and governance (ESG) performance in both market categories, as well as the more debatable, context-driven link between capital structure and financial outcomes. Our work is grounded in a large-sample comparative study of 4,886 firms from across the spectrum (1,317 in emerging markets and 3,569 in developed ones; Ting et al., 2020), and is informed by the wider body of research on ESG and capital structure performance.

The findings indicate that when compared with their developed market counterparts, firms in emerging markets tend to have higher ESG performance but also carry a greater measure of controversy risk. We also see that the way capital structure relates to financial performance is contingent on institutional factors unique to each market category. The argument here is that strategic financial analysis needs to be calibrated to the market context for both levers. An ESG or capital structure strategy will not make the transition from an emerging to a developed market without some adjustment.},
      keywords = {strategic financial analysis; sustainable growth; emerging markets; developed markets; ESG performance; capital structure; firm valuation},
      month = {August},
      doi = {https://doi.org/10.64388/IREV6I2-1722822}
  }