Shareholder value: An analysis of return on assets and equity and their impact on corporate strategic donation using profit margin and turnover

Abstract

Return on Assets(ROA) and Return on Equity(ROE) are key performance indicators that the investors of company shares always look at to assess their future earning potentials. Any shareholder who anticipates a decline in return on his assets or equity in the form of shares usually takes proactive step to avoid such an unprecedented, unforeseen and undesired events to happen.  From the biblical perspective, in Mathew 25:27, investors put their moneys into the bank to obtain interest. This study focuses on establishing relationship between Return on Asset and Return on Equity  using Gross margin and Turnover as a model of Corporate strategic Donation in the selected firms. The population for the study is made up all the companies registered with Security and Exchange Commission database. The study uses sample size of consolidated financial statement of 471 subsidiaries that were registered and reported their financial statement with Security and Exchange database. It is a quantitative study that used IBM SPSS version 21 to analyze the data obtained from the secondary source. The responses received were analyzed   through descriptive statistics in the form of percentages, mean score , standard deviation , Simple and Multiple Regression Analysis and ANOVA tests  to determine how the various groups within the data collected may have greater or lesser influence on the success of Corporate strategic Donation as discretionary management tool. The research reveal that Corporate strategic Donation does not  have adverse impact on the measurement of Return on Asset(ROA,) and Return on Equity(ROE,) as the main dependable variables used in the analysis . While Turnover has positive impact on Corporate Strategic Donations, Profit Margin has negative relationship with Corporate Strategic Donation. The study concluded that emerging firms from the downturn were committed to their communities, but also seeking to generate a bigger impact with their contributions. The study recommends that future researchers can  use  large sample size  to show the relationship between corporate donations and their resultant effect on  shareholder returns.