Firm-specific and economy wide determinants of firm profitability Greek evidence using panel data

摘要

Purpose - The purpose of this paper is to examine the determinants of profitability for a sample ofrnGreek non-financial firms listed in the Athens Stock Exchange for the period 1995-2003. This is arnvery important period for the Greek economy on the way to European monetary union (EMU).rnDesign/methodology/approach - The methodologies employed include panel data estimationrntechniques. This research attempts to exploit the determinants of firm profitability of non-financialrnGreek firms listed in Athens Exchange utilizing firm-specific publicly available accounting variablesrnusing panel data estimation techniques rather than cross-sectional analysis.rnFindings - According to the findings, firm profitability was positively affected by size, sales growthrnand investment and negatively by leverage and current assets. Additionally, we found that the EMUrnparticipation and the adoption of the euro were negatively related to firm profitability.rnPractical implications - Taking into account the fact that the Greek economy has undergonernsignificant transformation during the period under examination on its way to join EMU and to adoptrnthe euro currency, a model has been formulated where both firm-specific and economy wide factorsrndetermine firm profitability.rnOriginality/value - This paper focuses on a less developed and efficient stock market. In contrast tornprevious studies that did not take into account the convergence of the Greek economy to EMUrnaverages and the subsequent adoption of the euro, this paper analyses data for the pre-EMU andrnthe post-EMU periods in an attempt to quantify a potential macroeconomic effect on firm-specificrnprofitability.