The Relationship between firm Characteristics and Financial Success (In The Term of Jensen's Alpha and Sharpe Ratio)

This paper investigates factors which can discriminate between financial successful companies and unsuccessful companies. Data from all listed companies in TSE for period of 1380-1383 was gathered. Companies which their data had missing value for this period were removed from the sample.Financial success was measured through using two performance appraisal criteria i.e., the Sharp ratio and Jensen's alpha multiplier. 9 different company specific characteristics which have a significant relationship with company’s financial performance according to researches have been done in other countries were used as potential indictors of company financial success. To test the results of research, financial performance of companies was predicted for 1384. In order to quantify and make comparable forecasted performance with actual performance binary logic function was used.The results show that large companies which have a good profitability and no problem with working capital management have better financial performance than rest. In addition results indicate the relatively high power of identified factors in forecasting financial performance of companies.