DETERMINANTS OF FIRM PROFITABILITY IN CROATIA’S MANUFACTURING SECTOR

DETERMINANTS OF FIRM PROFITABILITY IN CROATIA’S MANUFACTURING SECTOR

Skuflic, Lorena
Mlinaric, Danijel
Druzic, Marko

Abstract: This paper investigates determinants of the profitability of industrial firms in Croatia, using data for large, medium and small companies for the period 2003-2014. This paper provides a broad theoretical review of the determinants of profitability analysed in economic literature with special remarks on firm level determinants, and explanation of most used variables such as size of firm, revenues, growth rate of revenues, sales, profit in previous years, ownership, productivity level, financial leverage, cost of inputs, indebtedness. Results from the panel ordinary least squares model for Croatia’s manufacturing sector reveal a positive and statistical significant relationship between profitability, total factor productivity, and concentration measured through Herfindahl-Hirschman index. On the other hand, indebtedness and liquidity show a negative relationship with the firm profitability of Croatia’s manufacturing sector.

Conference or Workshop Item
PeerReviewed

2016

3328