Publication

Abstract : This paper endeavors to understand the aspect of financialization that exists in companies, and study the possibility of an increase in an organization's profitability due to accessibility of financial instruments and other investment decisions that can sustain the net margins to meet market expectations and falling operational revenues by the real sector. Our objective is to observe the financial and investment activities of different real sector companies and relate the impact of their existence over the organization's net profits. The study also attempts to seek a further understanding upon the question of its exposure towards IT Service Organizations. With Information Technology reigning as a paramount factor in the Indian Economic context, the question of how financialization applies to the comparison of IT sector vis-à-vis other sectors is the highlight of this paper. This study after an extensive review of literature considers the reported items of the financial statements of 56 companies and analyze the various Non-Operational Items as independent variables that impact the Profit after Tax component of the Income Statement. These variables include income from financial services, other income, interest income, Ramp;D expenditure and workforce and IT service as a dummy variable. The analysis was performed using multiple regression technique. The study overwhelmingly supports significant impact of non-operating income on profit of the organization though there is no statistical difference across IT and non-IT sectors. However, one has to bear in mind the limitation and cross-sectional nature of data before generalizing these results. © 2014 ACM. Notes: cited By 0; Conference of 52nd Association of Computing Machinery (ACM) Annual Computers and People Research Conference, SIGMIS-CPR 2014 ; Conference Date: 29 May 2014 Through 31 May 2014; Conference Code:105804