Determinants of profitability in the EU-15 area

• Autores: Pierpaolo Pattitoni, Barbara Petracci, M. Spisni
• Localización: Applied financial economics, ISSN 0960-3107, Vol. 24, Nº. 10-12, 2014, págs. 763-775
• Idioma: inglés
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• Resumen

  • Using data on private firms in the EU-15 area over the period 2004�2011, we investigate the determinants of firm profitability. We extend existing models by considering possible nonlinear effects of typical micro-level determinants as well as the effect of additional micro-level and macro-level variables. Our findings � obtained using a plethora of econometric static and dynamic models � show that nonlinearities help explain the existence of conflicting theories of determinants of profitability (omitting second-order effects may result in inconsistent estimates) and shed light on the role of the firm�s opportunity cost of capital, the majority shareholder commitment level and variables which reflect the economic cycle in explaining firm profitability.