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Persistence and Determinants of Firm Profit in Emerging Markets

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  • Andreas Stephan
  • Andriy Tsapin

Abstract

The paper studies the persistence of profit and its determinants in emerging markets. We apply Markov chain analysis, dynamic panel GMM estimation, and quantile regression techniques to a panel of approximately 3,000 Ukrainian companies. The empirical results show a moderate level of profit persistence, as well as a relatively low speed of adjustment to the steady-state profit level, thus providing no support for the hypothesis that there is a lower persistence of profits in emerging markets due to more intense competition. Regarding the determinants of firm profit in an emerging market economy, the findings from alternative methods reveal that ownership structure and regional location of the firm have a significant impact.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.93496.de/dp848.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 848.

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Length: 30 p.
Date of creation: 2008
Date of revision:
Handle: RePEc:diw:diwwpp:dp848

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Keywords: Profit; Persistence; Convergence; Markov chain analysis; Ukraine;

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Cited by:
  1. Giorgio Canarella & Stephen M. Miller & Mahmoud M. Nourayi, 2012. "Firm Profitability: Mean-Reverting or Random-Walk Behavior?," Working Papers 1202, University of Nevada, Las Vegas , Department of Economics.
  2. Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.
  3. Diagne, Youssoupha S & Sène, Serigne Moustapha, 2009. "La profitabilité des secteurs de l’économie sénégalaise
    [Profitability of economic sectors in Senegal]
    ," MPRA Paper 54921, University Library of Munich, Germany.
  4. John Goddard & Hong Liu & Phil Molyneux & John O.S. Wilson, 2010. "The Persistence of Bank Profit," Working Papers 10002, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  5. Andreas Stephan & Andriy Tsapin & Oleksandr Talavera, 2009. "Why Do Firms Switch Their Main Bank?: Theory and Evidence from Ukraine," Discussion Papers of DIW Berlin 894, DIW Berlin, German Institute for Economic Research.

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