Firm size, profitability, and savings in Canada

Nguyen, The‐Hiep

doi:10.1016/0148-6195(85)90011-6

Cited by 4 publications

(3 citation statements)

References 12 publications

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“…Punnose (2008) and Malik (2011) showed a positive relationship between firm size and profitability. Nguyen (1985) found that large foreign-owned firms generally earn higher profits than large domestic firms. However, Keith (1998) found that size has a limited value in explaining profitability when he examined 38 small manufacturing firms in the Tayside Region of Scotland.…”

Section: Selection Of Variables Hypothesesmentioning

confidence: 99%

Factors affecting profitability in Malaysia

Alarussi

Alhaderi

2018

JES

201

193

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Purpose The purpose of this paper is to examine the factors affecting profitability in Malaysian-listed companies. It has been argued that profitability is the main pillar for any company to survive in the long run. Although profitability is the primary goal of all business ventures, scant attention has been paid to the factors that affect profitability in developing countries. This study investigates the factors affecting profitability in Malaysian-listed companies. Design/methodology/approach This research is based on five independent variables that were empirically examined for their relationship with profitability. These variables are: firm size (as measured by total sales), working capital (WC), company efficiency (assets turnover ratio), liquidity (current ratio) and leverage (debt equity ratio and leverage ratio). Data of 120 companies listed on Bursa Malaysia covering the period from 2012 to 2014 were extracted from companies’ annual reports. Pooled ordinary least squares regression and fixed-effects were used to analyze the data. Findings The findings show a strong positive relationship between firm size (total sales), WC, company efficiency (assets turnover ratio) and profitability. The results also show a negative relationship between both debt equity ratio and leverage ratio and profitability. Liquidity (current ratio) has no significant relationship with profitability. Research limitations/implications Due to the time limitation, the data includes only 120 companies listed in bursa Malaysia and covers the period from 2012 to 2014. Practical implications These results benefit internal users (such as mangers, shareholders and employees). They can realize the determinants of enhancing the profitability of their company after the depreciation of the Malaysian currency and therefore concentrate more on the factors that enhance their companies’ profitability. On the other side, other external users (such as investors, creditors, new established companies, tax authority) also may get advantages of these results. It is clear that those users concern about the profitability of companies and the determinants of their profitability after the currency’s depreciation. Originality/value This study differs than previous studies in many ways: first, it focuses on non-financial listed companies in Malaysia. Previous studies have concentrated on companies in the financial sector, such as banking and financial institutions or on industrial organizations. Second, this study analyzes the data in companies’ annual reports for a three-year period from 2012 to 2014. During this period, the economy in Malaysia was fluctuating due to currency depreciation. Third, the study used both return on equity and earnings per share as indicators of profitability. Fourth, the results of the study provide empirical evidence that large size firms with efficiently managed assets can improve operating income and ultimately enhance profitability. Last but not least, this study applies the resource-based theory and the trade-off theory.

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Section: Selection Of Variables Hypothesesmentioning

confidence: 99%

Factors affecting profitability in Malaysia

Alarussi

Alhaderi

2018

JES

201

193

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“…8. Firm size: This has been computed as log of total assets (Horioka & Tereda-Hagiwara, 2013;Nguyen, 1985). Firm size is expected to be positively associated with corporate saving.…”

Section: Review Of Literaturementioning

confidence: 99%

“…This variable is expected to have a positive relationship with corporate saving because increased future investment opportunities will motivate firms to increase internal funds (Brufman et al, 2013; Horioka & Terada-Hagiwara, 2013; IMF, 2006; Özmen et al, 2012). Firm size: This has been computed as log of total assets (Horioka & Tereda-Hagiwara, 2013; Nguyen, 1985). Firm size is expected to be positively associated with corporate saving. Cost of borrowings: This has been defined as ‘interest payments’ divided by ‘total outstanding borrowings’.…”

Section: Review Of Literaturementioning

confidence: 99%

What Drives Corporate Saving in India?

Shukla,

Nidugala

2023

The Indian Economic Journal

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Corporates have traditionally been modelled for their investment rather than saving behaviour. However, in recent times the firm-level saving has displayed an unprecedented behaviour across developed and developing economies. Corporate saving behaviour in India has also witnessed fluctuations, and this study captures a mix of aggregate and firm-level variables that may explain this behaviour. This article has three objectives (a) to understand the firm and macroeconomic factors that drive firm-level saving; (b) to examine whether the firm saving is affected by savings in preceding years; (c) to identify whether this saving behaviour of firms is for precautionary motives or not. The data set used in this article includes panel data of 2,109 publicly listed, manufacturing and service sector firms for the financial years 2004–2018. The data analysis has been done using dynamic panel-data models employing system GMM estimation with multiple robustness checks. The study findings show that firm-level saving in India is mainly driven by lagged corporate saving, Tobin’s Q, GDP growth rate, CPI inflation, and financial depth, among other factors. Additionally, empirical evidence supports the presence of dynamic persistence effect and precautionary motives for savings by firms. JEL Codes: E21, G01, G32, C33

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