University of Oulu

How financial factors influence growth of a firm : examination on companies from Finland

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Author: Järveläinen, Mikko1
Organizations: 1University of Oulu, Oulu Business School, Department of Management and International Business, International Business
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 1.5 MB)
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Language: English
Published: Oulu : M. Järveläinen, 2017
Publish Date: 2017-11-29
Thesis type: Master's thesis
Tutor: Hurmelinna-Laukkanen, Pia
Reviewer: Puhakka, Vesa
Hurmelinna-Laukkanen, Pia
This thesis looks at impact that financial factors have on growth of a company and how financial factors can be used as a tool in growth management. The purpose is to empirically analyze the influence of investments, equity ratio and gearing on growth of a firm. Furthermore, the aim is to find out whether these three variables have a relation with the growth of medium-sized Finnish companies. The study begins with a literature review where the concepts of investments, equity ratio and gearing are researched from the perspective of influencing growth. Based on existing literature about the three variables hypothesizes are formed for statistical testing. Consequently, the literature review forms a foundation for the empirical part of the thesis. The research method used in this study is quantitative and the data for the regression analysis has been gathered from certain company listings published in Talouselämä-magazine, implicating that this study uses secondary data as a data collection technique. Microsoft Excel and StatsModel softwares have been utilized to runt the statistical analysis of the study and to determine the relation between the studied variables and growth. As Finnish medium-sized companies have lacked growth in recent years, it is evident that ways to find root causes for slow growth, have gained attention. In this sense, this thesis is also continuity for the search of how companies can grow faster. The findings and results of the study provide clear implications how investments, equity ratio and gearing impact on growth of a company. Coherent with existing academic literature, the results of the thesis support the perception that there is a statistically significant relation between investments and growth, as well as, between equity ratio and growth. On the contrary, the findings indicate that there is not a statistically significant relation between gearing and growth of a company. Additionally, it can be concluded that investments have the most significant relation on growth. Suggesting that a firm should prioritize investments over equity ratio when looking for ways to grow company faster. The main purpose of this Master’s thesis is not to produce one size fits all suggestions for growing company faster. Theoretical part focusing on growth management with financial indicators is constructed with the aim to bring management perspective to the thesis and to produce reflections on how readers own organization is currently viewing usage of financial metrics data. Similarly, literature review and empirical study on relation of the three financial factors and growth cannot be generalized very well because of a rather small population used in the analysis, which in addition includes only companies from one country.
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Copyright information: © Mikko Järveläinen, 2017. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.