The Association among Risk Management, Financial Performance, Financing Decision and Investment Decision Based on Firm Size: An Empirical Investigation of Non-Financial Firms Listed at Pakistan Stock Exchange

The study analyzes whether the firm size influences the associations between financial decisions. For this purpose, the data of 60 non-financial firms from 2012 to 2017 are collected. The data are then divided into three categories. The study regards a firm with total asset value falling in the top third of the sample as a large firm, a firm with total asset value falling in the bottom third of the sample as a small firm, and the remainder as medium-sized firms. The results reveal that when we do not consider the firm size, the positive associations are found between risk management and financial performance, between risk management and financing decision, and between financial performance and investment decision. Conversely, the associations between financial performance and financing decision and between investment decision and financing decision are found to be negative. However, when we consider the firm size in the analysis, we found that the smaller is the firm size, the stronger is the association between risk management, financial performance, financing decision and investment decision. It is concluded that the firm size is an important factor in determining the associations between financial decisions.