An analysis of financial performance of Malaysian-based multinational enterprises

Abstract

Multinational enterprises (MNEs) have a major influence on contemporary world trade and business. Their dominance is predicted to grow in the future, as greater convergence and integration is achieved in world economies. Generating evidence that further our understanding of their behaviour is, therefore, considered to be an important research priority. This paper examines various aspects of the reported financial performance of Malaysian-based MNEs with emphasis on profitability. The aim is to provide empirical evidence on the nature and magnitude of their reported profitability. It compares the performances of foreign-controlled firms with those of Malaysian controlled firms, and also examines inter industrial differentials in profitability. Data on sampled firms were collected from their annual reports. Statistical analyses were conducted, on three-year average and annual profitability figures of the firms, using exploratory data analytical (EDA) techniques. Formal non parametric statistical tests were then carried out to establish whether there were differences in the performances of foreign controlled and locally controlled firms. Results indicate significant differences in the average performances reported by different groups of Malaysian based MNEs, both in terms of location of control and industrial affiliation. The findings suggest that MNEs' performances could be explained, using a number of characteristics, such as size, industry and location of control.