International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies


:: International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

ISSN 2228-9860
eISSN 1906-9642


Vol.12(10) (2021)

  • The Significance of Retained Earnings Based Firm Valuation Model during Military Regime Era in Pakistan

    Syed Muhammad Ali Tirmizi (Department of Business Administration, Faculty of Management Sciences, Foundation University Islamabad, Rawalpindi Campus, PAKISTAN),
    Muhammad Yar Khan(Department of Management Sciences, COMSATS University Islamabad, Wah Campus, PAKISTAN),
    Naeem Ullah (Department of Business Administration, Faculty of Management Sciences, Foundation University Islamabad, Rawalpindi Campus, PAKISTAN),
    Mehboob Ahmad (Department of Management Sciences, Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology (SZABIST), Islamabad Campus, PAKISTAN),
    Syed Mutahir Hussain Shah (Institute of Business & Management, University of Engineering & Technology (UET), Lahore, PAKISTAN).

    Disciplinary: Management Science (Corporate Finance & Investment|), Mathematical & Econometric Modeling & Analysis.

    ➤ FullText

    doi: 10.14456/ITJEMAST.2021.197

    Keywords: Retained earnings; Firm value; Shareholders wealth; Investment; Reinvestment; Listed manufacturing firms; Pervez Musharraf era.

    An empirical evaluation of the adopted but a modified version of the firm valuation equation has been conducted to test the retained earnings-based firm valuation model including retained earnings, firm value, and shareholders' wealth as variables. The impact of retained earnings on firm value and shareholders' wealth as well as firm value on shareholders' wealth has been evaluated by using primary data collected randomly from 85 listed manufacturing firms using a questionnaire. The alpha score of .866 has been generated relating constructs of the research instrument. Furthermore, factor analysis and ordinary least squares regression has been used to test study hypotheses. Study findings suggested that retained earnings have played a vital role in the expansion activities and benefited sample firms in achieving desired growth. Moreover, the value of sample firms enhanced and shareholders' wealth maximized due to investment and reinvestment of retained earnings in value-enhancing projects. Thus, results have applauded the Musharraf government and concomitantly validated the strength of retained earnings-based firm valuation model.

    Paper ID: 12A10H

    Cite this article:

    Tirmizi, S. M. A., Khan, M. Y., Ullah, N., Ahmad, M., Shah, S. M. H. (2021). The Significance of Retained Earnings Based Firm Valuation Model during Military Regime Era in Pakistan. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 12(10), 12A10H, 1-11.


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