The strongest level of correlation observed is 54.9%, which is between
ROA and ROE. The correlation coefficients of ROA and ROE with TDR are significantly
positive, 17.5% and 5.5% respectively. These results indicate that leverage
is positively correlated to a firm’s financial performance. However, firm
performance based on the market measure of stock price is negatively correlated
to TDR at − 15.3%. We also checked for correlations between performance
measures and capital structure before and after IFRS adoption.
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