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Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis

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  • Maja Pervan
  • Ivica Pervan
  • Marijana Ćurak

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.

Suggested Citation

  • Maja Pervan & Ivica Pervan & Marijana Ćurak, 2019. "Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 968-981, January.
    • Handle: RePEc:taf:reroxx:v:32:y:2019:i:1:p:968-981
    DOI: 10.1080/1331677X.2019.1583587
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    Cited by:

    1. M N, Nikhil & Chakraborty, Suman & B M, Lithin & Lobo, Lumen Shawn, 2023. "Does the adoption of Ind AS affect the performance of firms in India?," MPRA Paper 117247, University Library of Munich, Germany, revised 18 Apr 2023.
    2. Yehui Tong & Ramon Saladrigues, 2022. "An analysis of factors affecting the profits of new firms in Spain: Evidence from the food industry," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(1), pages 28-38.
    3. Maquieira, Carlos P. & Espinosa-Méndez, Christian & Gahona-Flores, Orlando, 2023. "How does economic policy uncertainty (EPU) impact copper-firms stock returns? International evidence," Resources Policy, Elsevier, vol. 81(C).
    4. Mohamed Aymen Ben Moussa & Amira El Feidi, 2023. "The Impact of Leverage on Financial Performance of Tunisian Quoted Firms," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 101-116.
    5. Stanić Milan & Cita Melita & Šulentić Marina Stanić, 2023. "The Influence of Working Capital Management on the Profitability of Manufacturing Enterprises - The Case of Croatia," South East European Journal of Economics and Business, Sciendo, vol. 18(2), pages 126-139, December.
    6. Njotoprajitno, Rosemarie Sutjiati & Peter, Peter & Hermawan, Vicky & Hadianto, Bram, 2022. "Debt Policy, Liquidity Policy, and Profitability: A Proof from the Agricultural Companies in Indonesia," OSF Preprints ghtz5, Center for Open Science.
    7. Christian Espinosa-Méndez, 2022. "Civil unrest and firm performance: evidence from Chile," Economics and Business Letters, Oviedo University Press, vol. 11(3), pages 118-124.

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