Profitability determinants of Portuguese knowledge-intensive business services: empirical evidence using panel data models

Abstract

This article studies the profitability determinants of knowledge-intensive business services (KIBS). To do so, we consider a sample of 187 Portuguese KIBS for the period 2002 to 2009, using dynamic panel estimators as estimation method. The results indicate that size, age, liquidity, long-term debt and R&D expenditure are determinants stimulating the profitability of Portuguese KIBS, with risk being a restrictive determinant. In addition, profitability is found to be persistent over time. The empirical evidence lets us make important suggestions for political decision-makers and the owners/managers of Portuguese KIBS.

Determinants of Profitability: Evidence from Real Sector Firms Listed in Borsa Istanbul

“…This means that bigger quoted firms having a higher liquidity ratio perform better. This finding for big firms is in line with the findings of Nunes and Serrasqueiro (2015) for Portugal, Mijić et al (2016) for Serbia, Bhayani (2010) for India, and Goddard et al (2005) for Belgium, Spain, Italy, France.…”

“…These results regarding size variable mean that the firms having more assets can diminish their costs and increase their profitability level owing to the scale economies idea. Generally, our results in terms of size are similar to those of Majumdar (1997) for India; Pervan and Mlikota (2013) for Croatia; Nunes and Serrasqueiro (2015) and Nunes et al (2009) for Portugal, Yazdanfar (2013) for Sweden, Andres (2008) for Germany, and Asimakopoulo et al (2009) for Greece. However, these results contradict those of Goddard et al (2005) for Belgium, Spain, Italy, France, and the UK, Močnik and Širec (2015) for Slovenia, Hunjra et al (2014) for Pakistan, and Saito (2008) for Japan.…”

“…More specifically, while greater lagged profitability, size, and growth of sales positively influence profitability; greater financial leverage, liquidity, and tangibility cause firms to have greater difficulties in profitability. Nunes and Serrasqueiro (2015) explore the effects of micro-level variables on profitability of 187 knowledge-intensive business services firms in Portugal for the 2002-2009 period in the context of the dynamic panel data analysis. Their empirical results from system GMM and bias-corrected LSDV estimations show that size in terms of sales, liquidity, age, leverage measured by long-term debt, and R&D expenditure have positive and significant effects on firm profitability, but there is a negative correlation between risk and profitability.…”

Profitability and Its Determinants in Turkish Manufacturing Industry: Evidence from a Dynamic Panel Model

“…Goddard et al, 2005;Isik & Soykan, 2013;Pattitoni et al, 2014;Nunes & Serrasqueiro, 2015;Vătavu, 2014;Cavaco, Challe, Crifo, Rebérioux, & Roudaut, 2016; among others) on the relationship between ROA and ROA it−1 show that profitability in the prior period has important influence on the current one according to the persistence of profit hypothesis developed by Mueller (1977Mueller ( , 1986. On one side, the fact that the coefficient of ROA it−1 is found to be a low value means that manufacturing industry is highly competitive.…”

“…While the production costs of firms with high level of R&D intensity may be reduced, their productivity levels and competitive advantage are more likely to increase. Thus, the increase in the sales volume of the firms or the decrease of the costs leads to better profitability (Işık, Engeloğlu, & Kılınç, 2016;Kafouros, 2005;Nunes & Serrasqueiro, 2015;Akben-Selcuk, 2016).…”