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Financial Performance Among Top10 Automotive Leaders in the EU: Essential Techniques to Investigate the Structure of Moments While Using the GMM with Dynamic Panel Data

Author

Listed:
  • Heryán Tomáš

    (Department of Finance and Accounting, School of Business Administration, Silesian University, Czech Republic)

  • Růčková Petra

    (Department of Finance and Accounting, School of Business Administration, Silesian University, Czech Republic)

  • Cerulli Giovanni

    (CNR-IRCrES, National Research Council of Italy, Research Institute on Sustainable Economic Growth, Rome, Italy)

Abstract

The automotive industry is widely considered to be crucial for the economy, as it reflects economic development in general. Despite interest in financial performance, few studies have considered paying attention to the ownership structure among stockholders. Hence, the study aims to find out how the degree of ownership concentration, measured through the independence indicator of the Bureau van Dijk, is reflected in the financial management of companies in the automotive industry among selected European countries. The generalized method of moments (GMM) technique is widely used while investigating panel data with a short estimating period, i.e. nine years annually in this case. However, this study reveals that, without deploying techniques, subsequently introduced a modified version of GMM estimators with panel data by providing an implementation using Stata statistical software. Otherwise, these particular econometric tools to analyze a dynamic panel can often give false significant estimates. Overall, liquidity seems to be significant in the case of firms with less concentrated ownership, whereas companies with a major owner are affected more by selected macroeconomic variables.

Suggested Citation

  • Heryán Tomáš & Růčková Petra & Cerulli Giovanni, 2024. "Financial Performance Among Top10 Automotive Leaders in the EU: Essential Techniques to Investigate the Structure of Moments While Using the GMM with Dynamic Panel Data," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 34(3), pages 26-59.
    • Handle: RePEc:vrs:suvges:v:34:y:2024:i:3:p:26-59:n:1002
    DOI: 10.2478/sues-2024-0012
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    More about this item

    Keywords

    Financial Performance; Ownership structure; EU automotive industry; Dynamic panel estimation;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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