Persistence and Determinants of Firm Profit in Emerging Markets

34 Pages Posted: 6 Jul 2009

See all articles by Andreas Stephan

Andreas Stephan

DIW Berlin, German Institute for Economic Research

Andriy Tsapin

National Bank of Ukraine

Date Written: December 2008

Abstract

The paper studies the persistence of profit and its determinants in emerging markets. We apply Markov chain analysis, dynamic panel GMM estimation, and quantile regression techniques to a panel of approximately 3,000 Ukrainian companies. The empirical results show a moderate level of profit persistence, as well as a relatively low speed of adjustment to the steady-state profit level, thus providing no support for the hypothesis that there is a lower persistence of profits in emerging markets due to more intense competition. Regarding the determinants of firm profit in an emerging market economy, the findings from alternative methods reveal that ownership structure and regional location of the firm have a significant impact.

Keywords: Profit, Persistence, Convergence, Markov chain analysis, Ukraine

JEL Classification: G32, G30

Suggested Citation

Stephan, Andreas and Tsapin, Andriy, Persistence and Determinants of Firm Profit in Emerging Markets (December 2008). DIW Berlin Discussion Paper No. 848. Available at SSRN: https://ssrn.com/abstract=1429282 or http://dx.doi.org/10.2139/ssrn.1429282

Andreas Stephan (Contact Author)

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Andriy Tsapin

National Bank of Ukraine

str. 9 Instytutska
Kyiv, 01601
United States

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