No Appealing Future For High Growth – Low Profitability Firms: Evidence from Turkey’s Top 1000
AbstractThe view that profitability, not growth, is the driving force behind the firm performance, and unprofitable high growth can not lead to financial success has often been discussed in the literature. In this study, I tested this hypothesis on Turkey’s top 1000 data using an extended version of the method of Davidson et al. (2009). My sample strongly supports the hypothesis that controlling for leverage, low growth-high profitability (profit) firms outperform high growth-low profitability (growth) firms regarding both directions of their transition to an upper state and a lower state in subsequent periods. The hypothesis that controlling for type of firm (growth or profit firm), leverage matters with respect to firm’s future performance is weakly supported by 3-year transition data.
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Bibliographic InfoPaper provided by Turkish Economic Association in its series Working Papers with number 2011/2.
Length: 18 pages
Date of creation: 2011
Date of revision:
Firm performance; growth; profitability; Turkey;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-25 (All new papers)
- NEP-ARA-2012-01-25 (MENA - Middle East & North Africa)
- NEP-ENT-2012-01-25 (Entrepreneurship)
- NEP-FDG-2012-01-25 (Financial Development & Growth)
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