Firm Size-Profitability Nexus: Evidence from Panel Datafor Nigeria

摘要

The paper investigates the long run relationship and causality issues between firm size and profitability in 66 firms in Nigeria by using the panel cointegration method for the period 1999 –2007. The empirical results show that there is long run steady-state relationship between firm size and profitability. The short run causal relationship shows that there is bidirectional relationship between firms’ size and profitability. This implies that firm size Granger causes profitability and profitability Granger causes firm size. The results clearly refute the general assumption that causation runs from only firm size to profitability on which most existing studies have been based.Sa?etakRad prou?ava dugoro?nu vezu i pitanja kauzalnosti izme?u veli?ine tvrtke i profitabilnosti u 66 tvrtki u Nigeriji koriste?i metodu panelne kointegracije za period od 1999. do 2007. Empirijski rezultati pokazuju da postoji dugoro?na stabilna veza izme?u veli?ine tvrtke i profitabilnosti. Kratkoro?na kauzalna veza pokazuje da postoji dvosmjerna veza izme?u veli?ine tvrtki i profitabilnosti. To ukazuje na ?injenicu da Granger veli?ine tvrtke uzrokuje profitabilnost a Granger profitabilnosti uzrokuje veli?inu tvrtke. Rezultati jasno pobijaju op?u pretpostavku da uzro?na veza postoji samo od veli?ine tvrtke prema profitabilnosti, na ?emu se bazira ve?ina dosada?njih istra?zivanja.