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The Determinants of Firm Profitability in Australian Manufacturing

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  • McDonald, James Ted

Abstract

This study provides new evidence on the determinants of the profitability of Australian manufacturing firms by analyzing a unique firm-level data set of firm performance over the period 1984-93. The panel nature of the data permits the estimation of dynamic profitability models over the business cycle to test both the persistence and cyclicality of firm profitability. Econometric results suggest that lagged profitability is a significant determinant of current profit margins and that industry concentration is positively related to firm profit margins. Also, profit margins are found to be procyclical in concentrated industries but counter-cyclical in less concentrated industries. Copyright 1999 by The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal The Economic Record.

Volume (Year): 75 (1999)
Issue (Month): 229 (June)
Pages: 115-26

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Handle: RePEc:bla:ecorec:v:75:y:1999:i:229:p:115-26

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Cited by:
  1. Saara Tamminen & Chang Han-Hsin, 2012. "Company heterogeneity and mark-up variability," Working Papers 32, Government Institute for Economic Research Finland (VATT).
  2. Mark Rogers, 2001. "The Effect of Diversification on Firm Performance," Melbourne Institute Working Paper Series wp2001n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  3. Simon Feeny & Mark Harris & Mark Rogers, 2005. "A dynamic panel analysis of the profitability of Australian tax entities," Empirical Economics, Springer, vol. 30(1), pages 209-233, 01.
  4. Mita Bhattacharya, 2002. "Group Profit, Market Share and Efficiency: Evidence from Australian Manufacturing," Review of Industrial Organization, Springer, vol. 20(2), pages 187-199, March.
  5. Patrice Laroche & Hristos Doucouliagos, 2009. "Unions and Profits: A meta-regression Analysis," Post-Print hal-00648569, HAL.
  6. Edwards, Seanicaa & Allen, Albert J. & Shaik, Saleem, 2006. "Market Structure Conduct Performance (SCP) Hypothesis Revisited using Stochastic Frontier Efficiency Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21350, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Harry Bloch & James Ted McDonald, 2000. "Import Competition and Labour Productivity," Melbourne Institute Working Paper Series wp2000n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  8. David Norman & Anthony Richards, 2012. "The Forecasting Performance of Single Equation Models of Inflation," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 64-78, 03.
  9. Chris Doucouliagos & Patrice Laroche, 2007. "Unions and Profitability: A Meta-Analysis," Economics Series 2007_01, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  10. Warren, Paul, 2005. "Profitability of Canadian- Versus U.S.-controlled Enterprises," Economic Analysis (EA) Research Paper Series 2005030e, Statistics Canada, Analytical Studies Branch.
  11. Warren, Paul, 2005. "Rentabilite des entreprises sous controle canadien par rapport aux entreprises sous controle americain," Serie de documents de recherche sur l'analyse economique (AE) 2005030f, Statistics Canada, Direction des etudes analytiques.
  12. Maurin, Laurent & Roma, Moreno & Vetlov, Igor, 2011. "Profit dynamics across the largest euro area countries and sectors," Working Paper Series 1410, European Central Bank.
  13. James McDonald & Harry Bloch, 1999. "The Spillover Effects of Industrial Action on Firm Profitability," Review of Industrial Organization, Springer, vol. 15(2), pages 183-200, September.
  14. Nina Ponikvar & Maks Tajnikar, 2011. "Are the Determinants of Markup Size Industry-Specific? The Case of Slovenian Manufacturing Firms," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(2), pages 229-244, June.
  15. Simon Feeny, 2000. "Determinants of Profitability: An Empirical Investigation Using Australian Tax Entities," Melbourne Institute Working Paper Series wp2000n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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