Factors influencing return on equity in joint-stock companies: a panel analysis based on three joint-stock companies of Uzbekistan

Abstract

The purpose of the article is to determine the financial factors influencing the formation of return on equity (ROE) in joint-stock companies of Uzbekistan based on a controlled panel econometric approach. The official annual reports of JSC "Kyzylkumcement," JSC "Uzbektelecom," and JSC "Uzbek Republican Commodity Exchange" for 2016-2025 were used as the empirical basis; a total of 30 enterprises were surveyed. ROE is recalculated as the ratio of net profit to equity at the end of the year. The main model utilized financial leverage (LEV), current liquidity (LIK), and the logarithm of asset size (SIZE), while the 2020-2025 strength test utilized asset turnover (ATO). Although the Pooled OLS model shows a positive correlation of leverage, this coefficient lost its significance after the introduction of fixed enterprise effects. In the full-cycle FE model, SIZE was positive and statistically significant at a level of 5%; in the last six-year specification, ATO was positive and highly significant. The results indicate that in increasing ROE, effective asset utilization and monetization of operational scale are more important than the mechanical increase in the volume of debt/liabilities.