Business Strategies and Corporate Financial Performance

This study investigates the relation between a company's internal factors (maturity and financial flexibility) and its business strategy and the relation between business strategy and financial performance (risk and return). Finally, the impact of industry (market volatility and competition in the industry) on the relation between internal factors and the company's business strategy has been investigated. To assess the type of companies' applied strategy (aggressive or defensive) , the Ittner and Larcker) 1997) scoring system is used. For statistical analysis, multivariate regression model with two control variables (firm size and financial leverage) is used. The sample consists of 168 companies listed in Tehran Stock Exchange for the period from 2011 to 2015. The results show that the more mature and financially flexible a company is, the more defensive business strategy it has. In addition, the more aggressive business strategy of a company, the more asset returns and the less specific risk. The results also show that higher market volatility and industry competitiveness do not have any amplifying effect on the relation of the maturity and financial flexibility of a company to its business strategy