Abstract
Abstract
Background:
While Corporate Return on Equity is a widely used measure of financial performance, its aggregate figure can mask significant differences in underlying management strategies and risk profiles.
Objective:
This study examines the determinants of corporate return sustainability across Indonesia, Malaysia, Thailand, and Singapore during the volatile macroeconomic period of 2021–2025.
Methodology:
Using an expanded DuPont decomposition framework on a panel of over 7,000 firm-year observations, this study isolates the operational transmission channels that determine return quality across developed and emerging institutional contexts.
Results:
The study presents the Margin Quality Hypothesis, which identifies profit margins as the primary indicator of return sustainability. It also highlights a leverage paradox in non-financial firms, arguing that debt increases short-term returns but accelerates declines when interest rates are high. Profit margins consistently influence returns across the region, while asset turnover is mostly strong in industrializing emerging markets, like Indonesia, Malaysia, and Thailand. The impact is weaker in developed service-oriented markets like Singapore.
Significance:
These insights offer policymakers a clear guide for targeted regulation, while helping executives prioritize margin-defensive growth and asset efficiency over excessive balance sheet expansion