The Dynamic Linkage among the Size, Growth and Profitability of Listed Companies in the ASEAN-4 Countries

Abstract

The purpose of this paper is to examine the dynamic relationship among the size, growth, and profitability of listed companies. The study sample comprised listed companies in the ASEAN-4 countries-Malaysia, the Philippines, Singapore, and Thailand-over the period 1972-2014. The K-medoids algorithm was employed in a cluster analysis, and the generalized method of moments (GMM) was applied to examine the dynamic relationship. The empirical results reveal that smaller companies tend to have higher growth than larger companies. Moreover, the results indicate that persistence of growth and persistence of profitability do not exist. There is also evidence that profitability affects companies' growth, but companies' growth does not affect profitability.