The Relationship Between Firm Size And Market Performance Of Namibia’s Investment Management Firms

ABSTRACT

This study had the objective of examining the effects of firm size on market performance of investment management firms in Namibia using fixed effects method estimation to analyse panel data for the period 2003-2017. Return on investment was used as a proxy to measure firm performance, while assets under management and number of employees were employed as the main variables of interest to measure firm size. Capital invested, volume of sales and technology investment were employed as firm size control variables. The results show that assets under management and number of employees had a positive impact on return on investment. However, at 5% confidence level the number of employees was statistically insignificant. Capital invested, volume of sales and technology investment is positively correlated to performance and the relationship was statistically significant. Based on the premise that no study has to date been done in the Namibian context detailing the relationship of firm size and market performance of investment management firms, this study looked to set the foundation in academic literature in the Namibian context. The study recommends that small firms in the industry increase their performance by increasing their assets under management and capital investment through identifying the optimal debit and equity mix that fits their firm strategy. It additionally recommends firms to increase their volume of sales and technology investment. In terms of number of employees, it is advisable that they focus on quality as opposed to quantity. Firms need to focus on employing competent employees in the relevant departments and more especially those in the financial analysis and investment department.