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Firm and industry effects on firm profitability: an empirical analysis of KSE

Author

Listed:
  • Raza, Syed Ali
  • Farooq, M. Shoaib
  • Khan, Nadeem

Abstract

The study meant to explore the external and internal factors which influence firm’s profitability i.e. “Firm and Industry Effects on Firm Profitability”. In this research ROA and ROE has taken as profitability measure and their dependency has checked with firm effect, industry effect and market share. Data has extracted from “Balance Sheet Analysis of Joint Stock Companies Listed on the Karachi Stock Exchange Volume-II 2004-2009” which is state bank of Pakistan publications and it represents six year financial statements of the firms. By using Regression analysis technique result has found which represent that all three independent factor i.e. firm effect, industry effect and market share are significant with ROA and ROE.

Suggested Citation

  • Raza, Syed Ali & Farooq, M. Shoaib & Khan, Nadeem, 2011. "Firm and industry effects on firm profitability: an empirical analysis of KSE," MPRA Paper 36797, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36797
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    File URL: https://mpra.ub.uni-muenchen.de/36797/1/MPRA_paper_36797.pdf
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    References listed on IDEAS

    as
    1. Matthew Holian & Ali Reza, 2011. "Firm and industry effects in accounting versus economic profit data," Applied Economics Letters, Taylor & Francis Journals, vol. 18(6), pages 527-529.
    2. Gabriel Hawawini & Venkata Subban Subramanian & Paul Verdin, 2003. "Is performance driven by industry- or firm-specific factors? A new look at the evidence," ULB Institutional Repository 2013/14188, ULB -- Universite Libre de Bruxelles.
    3. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-351, June.
    4. Caloghirou, Yiannis & Protogerou, Aimilia & Spanos, Yiannis & Papagiannakis, Lefteris, 2004. "Industry-Versus Firm-specific Effects on Performance:: Contrasting SMEs and Large-sized Firms," European Management Journal, Elsevier, vol. 22(2), pages 231-243, April.
    5. Gabriel Hawawini & Venkata Subban Subramanian & Paul Verdin, 2005. "Is performance driven by industry or firm-specific factors? A response to McNamara, Aime and Vaaler," ULB Institutional Repository 2013/14192, ULB -- Universite Libre de Bruxelles.
    6. Eriksen, Bo & Knudsen, Thorbjorn, 2003. "Industry and firm level interaction: Implications for profitability," Journal of Business Research, Elsevier, vol. 56(3), pages 191-199, March.
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    Cited by:

    1. repec:rss:jnljef:v4i7p2 is not listed on IDEAS
    2. repec:rss:jnljef:v4i7p1 is not listed on IDEAS
    3. Ksenija Dencic-Mihajlov, 2014. "Profitability During the Financial Crisis Evidence from the Regulated Capital Market in Serbia," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 12(1), pages 7-33.
    4. repec:rss:jnljfe:v4i3p2 is not listed on IDEAS
    5. repec:rss:jnljef:v4i5p5 is not listed on IDEAS
    6. repec:rss:jnljef:v4i6p6 is not listed on IDEAS
    7. Ijaz Hussain, 2012. "The Consequences of Easy Credit Policy, High Gearing, and Firms’ Profitability in Pakistan’s Textile Sector: A Panel Data Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(1), pages 33-44, Jan-June.

    More about this item

    Keywords

    Return on Assets (ROA); Return on Equity (ROE); market share;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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