Impact of non-financial parameters of strategic investment decision-making on corporate financial performance

Purpose This study aims to explore the non-financial parameters (NFPs) of strategic investment decision-making (SIDM) and their impacts on corporate financial performance (CFP). Design/methodology/approach In this quantitative study, first, primary data were collected through a survey questionnaire from the managers of listed Pakistani manufacturing firms during 2018 via personal visits to companies, and 142 valid responses were received. The secondary data included annual reports and stock market data, which were used to measure CFP with indicators such as profitability growth and Tobin’s q. Principal component analysis (PCA) was applied to identify the NFP focus in SIDM, such as top management or firm strategy emphasis. Various regression models were used to thoroughly consider the impact of the NFPs on financial performance. Findings The study shows that the different emphases of SIDM cannot explain financial performance very well. However, there is an indication that the firm strategy component (emphasis) is positively linked to the profitability growth and share price growth. Moreover, top-level management emphasis seems to influence Tobin q. Research limitations/implications This study highlights how, for example, the management may contribute to operational performance. Understanding these dynamics provides insights into how businesses create value for shareholders and for the society. Practical implications For example, top-level management can impact SIDMs and CFPs, but managers also need to consider company-specific aspects of the decisions and performance. Originality/value The study enriches the academic and managerial literature by explicitly analyzing the impact of SIDM in a developing country context.