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Analysis of the population of non-financial corporations with negative economic profitability


  • X. Deville

    (National Bank of Belgium, Microeconomic Information Department)

  • F. Verduyn

    (National Bank of Belgium, Microeconomic Information Department)


The article describes the characteristics of firms with negative economic profitability. Analysis of the pattern of profitability during the period from 1999 to 2008 on the basis of the annual accounts of non-financial corporations shows that, year after year, one in ten firms makes a loss, and in the case of SMEs that figure is actually as high as one in four firms. These findings require further investigation. For the majority of non-financial corporations (85.6 p.c.) the period of negative economic profitability does not persist for longer than 4 years. Negative economic profitability is proportionately more common for firms in the non-manufacturing sectors than in manufacturing industry. Analysis by firm size, distinguishing between large firms and SMEs, reveals that SMEs are proportionately more affected. If age is considered, large firms with negative economic profitability are 2 to 3 years younger, on average, than other firms, whereas age is not a factor in the case of SMEs. In regard to regional location, the Brussels Capital Region has the highest ratio of firms with a negative profitability. For most firms, the negative sign of the profitability ratio can be attributed to the firm ending the financial year with an operating loss. Within that group of firms with a negative operating result, as many as 33.1 p.c. of large firms and 44.9 p.c. of SMEs fail to generate any value added. Ultimately, in the case of 30.8 p.c. of the large firms and 42.1 p.c. of the SMEs, the net assets had fallen below the specified minimum, so that – under the alarm bell procedure – any interested party can apply to the court for dissolution of the company

Suggested Citation

  • X. Deville & F. Verduyn, 2010. "Analysis of the population of non-financial corporations with negative economic profitability," Economic Review, National Bank of Belgium, issue i, pages 77-91, June.
  • Handle: RePEc:nbb:ecrart:y:2010:m:june:i:i:p:77-91

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    More about this item


    firms’ results; financial structure; distribution analysis; sectoral analysis;

    JEL classification:

    • D39 - Microeconomics - - Distribution - - - Other
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General


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