Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis. Issue 1 (1st January 2019)

• Record Type: Journal Article
• Authors: Pervan, Maja; Pervan, Ivica; Ćurak, Marijana
• Is Part Of: Ekonomska istraživanja. Volume 32:Issue 1(2019)
• Page Start: 968
• Page End: 981
• Publication Date: 2019-01-01
• Subjects: Firm profitability -- manufacturing industry -- Croatia -- panel data analysis; D21 -- D22 -- G32 -- L21 -- L25; Economics -- Research -- Periodicals; Economics -- Research; Electronic journals; 330.072
• DOI: 10.1080/1331677X.2019.1583587
• Languages: English
• ISSNs: 1331-677X

Abstract

Abstract: Given that the goal of this study was to examine the influence of different factors on a firm's profitability, we designed a model with three categories of profitability determinants: firm-specific, industry-specific and macroeconomic. The analysis was performed on 9359 firms operating in the Croatian manufacturing industry during the 2006–2015 period. Since the designed model was formulated in a way that encompasses the dynamic aspect of profitability, the General Method of Moments (G.M.M.) dynamic panel estimator was applied. Formulation of such a model adds to the existing literature if one takes into account that a dynamic analysis of the drivers of profitability has not been done using data from the Croatian manufacturing sector. The results of the conducted analysis revealed that a firm's age, labour cost and industry concentration, as well as G.D.P. growth and inflation, have significant influence on a firm's profitability.