What Determines Profitability in the Indian Automobile Industry?

2021 ◽  
pp. 001946622110635
Author(s):  
Shilpi Tyagi ◽  
Varun Mahajan
Keyword(s):  
Market Power ◽  
Automobile Industry ◽  
Positive Impact ◽  
Growth Strategy ◽  
Raw Material ◽  
Investment Strategies ◽  
Firm Level ◽  
Global Competitiveness ◽  
Advertising Intensity ◽  
Jel Code

This study tends to examine the firm-level profitability determinants of Indian automobile and ancillary industry which is recognised for its global competitiveness. The study uses recent dataset to investigate the firm-level profitability determinants in the Indian automobile and ancillary industry and records the effect of shifts in profitability due to change in economic environment. This study intends at using real financial balanced panel data for a period 1999–2019 and applies the two-step system generalised method of moments regression model with robust standard errors. The study has found that lagged profitability, marketing and advertising intensity, firm’s market power and operational efficiency have exercised positive impact on firm-level profitability. Negative and statistically significant impact of raw material import intensity and export intensity highlights the need of planning and implementation of appropriate investment strategies. The findings of this study suggest that firms should pay more attention to optimise their operating expenditures, marketing and advertisement expenditures and expand their market power as a part of their survival and growth strategy. JEL Code: L25

The impact of industry concentration on the market’s ability to anticipate future earnings

2016 ◽  
Vol 24 (4) ◽  
pp. 443-475 ◽  
Author(s):  
In-Mu Haw ◽  
Bingbing Hu ◽  
Jay Junghun Lee ◽  
Woody Wu
Keyword(s):  
Stock Returns ◽  
Market Power ◽  
Information Transfer ◽  
Positive Impact ◽  
Product Market ◽  
Industry Concentration ◽  
Firm Level ◽  
Content Type ◽  
Future Earnings ◽  
The Impact

Purpose The existing literature has established the importance of industry concentration in explaining firm performance and information environments. However, little is known about whether and how industry concentration affects investors’ ability to anticipate future earnings. This paper aims to investigate this query by identifying and testing two channels, product market power and intra-industry information transfer, through which industry concentration affects the informativeness of stock returns about future earnings. Design/methodology/approach The paper measures the informativeness of stock returns about future earnings by the future earnings response coefficient (FERC)). This study estimates the FERC using a firm-level sample from 38 economies. Findings The authors find that industry concentration significantly enhances investors’ ability to predict future earnings. Further tests show that both product market power and intra-industry information transfer contribute to explaining the positive association between industry concentration and the FERC, with the former playing a more salient role. Finally, the authors show that a country’s effective competition law attenuates the positive impact of industry concentration on the FERC by weakening the economic impact of the two underlying channels. Originality/value This study contributes to the growing literature on the price-leading-earnings relation, industry concentration and international corporate governance.

Firm level profitability determinants in Indian drugs and pharmaceutical industry

2017 ◽  
Vol 11 (3) ◽  
pp. 271-290 ◽  
Author(s):  
Shilpi Tyagi ◽  
D.K. Nauriyal
Keyword(s):  
Pharmaceutical Industry ◽  
Fixed Effects ◽  
Positive Influence ◽  
Working Environment ◽  
Raw Material ◽  
Investment Strategies ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Fixed Effects Regression

Purpose This paper aims to analyze the firm level determinants of profitability of Indian drug and pharmaceutical industry which is known for historically weak R&D initiatives. Design/methodology/approach The change in the economic environment brought out by the Trade-Related Intellectual Property Rights (TRIPS) compliance, this industry was found to have fast adjusted to a new working environment by substantially modifying its strategies. This study aims at using inflation-adjusted panel data for a period 2000-2013 and applies the fixed effects regression model with cluster standard errors. Findings The study has found that export intensity, A&M intensity, firm’s market power and stronger patent regime dummy have exercised positive influence on profitability. The negative and statistically significant influence of R&D intensity and raw material import intensity points to the need for firms to adopt suitable investment strategies. Research limitations/implications The study suggests that firms are required to pay far more attention to optimize their operating expenditures, advertisement and marketing expenditures and improve their export orientation, as part of the long-term strategy. Originality/value This study uses a recent data-set to analyze the firm level profitability determinants in the Indian pharmaceutical industry and captures the effect of change in profitability pre and post-TRIPS.

Impact of Determinants of Industrial Development on Employment and Wages in Indian Manufacturing

2020 ◽  
pp. 18-30
Keyword(s):  
Technical Efficiency ◽  
Total Factor Productivity ◽  
Technical Change ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Factor Productivity ◽  
Firm Level ◽  
Employment Level ◽  
The Impact ◽  
Level Performance

ABSTRACT The present study was undertaken to explore the evolution of the impact of firm-level performance on employment level and wages in the Indian organized manufacturing sector over the period 1989-90 to 2013-14. One of the major components of the economic reform package was the deregulation and de-licensing in the Indian organized manufacturing sector. The impact of firm-level performance on employment and wages were estimated for Indian organized manufacturing sector in major sub-sectors in India during the period from 1989-90 to 2013-14 of the various variables namely profitability ratio, total factor productivity change, technical change, technical efficiency, openness (export-import), investment intensity, raw material intensity and FECI in total factor productivity index, technical efficiency, and technical change. The study exhibited that all explanatory variables except profitability ratio and technical change cost had a positive impact on the employment level. Out of eight variables, four variables such as net of foreign equity capital, investment intensity, TFPCH, and technical efficiency change showed a positive impact on wages and salary ratio and rest of the four variables such as openness intensity, technology acquisition index, profitability ratio, and technical change had negative impact on wages and salary ratio. In this context, the profit ratio should be distributed as per the marginal rule of economics such as the marginal productivity of labour and capital.

The Impact of the Business Environment on the Formalization of Informal Firms. The Case of Kosovo

Südosteuropa ◽  
2020 ◽  
Vol 68 (4) ◽  
pp. 505-529
Author(s):  
Kujtim Zylfijaj ◽  
Dimitar Nikoloski ◽  
Nadine Tournois
Keyword(s):  
Negative Impact ◽  
Positive Impact ◽  
Business Environment ◽  
Positive Influence ◽  
Policy Implications ◽  
Tax Reforms ◽  
Firm Level ◽  
Characteristics Analysis ◽  
Significant Negative Impact ◽  
The Impact

AbstractThe research presented here investigates the impact of the business environment on the formalization of informal firms, using firm-level data for 243 informal firms in Kosovo. The findings indicate that business-environment variables such as limited access to financing, the cost of financing, the unavailability of subsidies, tax rates, and corruption have a significant negative impact on the formalization of informal firms. In addition, firm-level characteristics analysis suggests that the age of the firm also exercises a significant negative impact, whereas sales volume exerts a significant positive impact on the formalization of informal firms. These findings have important policy implications and suggest that the abolition of barriers preventing access to financing, as well as tax reforms and a consistent struggle against corruption may have a positive influence on the formalization of informal firms. On the other hand, firm owners should consider formalization to be a means to help them have greater opportunities for survival and growth.

Banking market structure and efficiency: an assessment of the USA and Canada

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Salah U-Din ◽  
David Tripe
Keyword(s):  
Market Structure ◽  
Market Power ◽  
Negative Impact ◽  
Positive Impact ◽  
Bank Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
Banking Market ◽  
Cost Efficient ◽  
The Impact

PurposeThe study aims to analyze the changes in banking market structure and their impact on the bank efficiency.Design/methodology/approachThis study uses a one-stage stochastic frontier analysis (SFA) to compare the impact of the market structure and the GFC on the economic efficiency of the major banks in both countries.FindingsA significant negative impact of the GFC is observed on bank efficiency. Overall, Canadian banks posted better efficiency scores than their American counterparts. Additionally, cost-efficient banks are found to be more resilient to crises and more profit-efficient in the post-GFC period. The authors found that market power had a positive impact on the cost and profit efficiency of banks. Higher levels of equity, market power and concentration helped banks be more cost-efficient.Research limitations/implicationsOnly large banks are selected for study although it represents the majority stake of both banking sectors.Practical implicationsBanking regulators should include more measures to assess the banking market structure and performance.Originality/valueAs per the best knowledge of the authors, it is the first study to assess the change in banking market structure and efficiency of the US and Canadian banking sectors in the post-GFC period.

The Firm-Specific Factors Influencing the Tax Haven Operations of Indian Multinationals

2021 ◽  
pp. 001946622110360
Author(s):  
P. Vineeth ◽  
K. B. Nidheesh
Keyword(s):  
Service Sector ◽  
Positive Impact ◽  
Binary Logistic Regression ◽  
Binary Logistic Regression Model ◽  
Firm Level ◽  
Return On Equity ◽  
Factors Influencing ◽  
Tax Haven ◽  
Specific Factors ◽  
Knowledge Intensive

The present study measures the role of firm-specific factors influencing the likelihood of establishing a subsidiary in tax haven countries. The panel data of Indian companies, which have business operations in foreign countries, are used for the study. The firm-level data for the period from 2007 to 2018 are analysed by using binary logistic regression model. The result shows that the intangible assets, long-term debt, number of subsidiaries and service sector dummy have significant and positive impact on tax haven operations of multinational companies, but the experience of the firm and return on equity are insignificant, and a firm’s size deters the likelihood of setting a tax haven subsidiary. The results also show that firms from high-technology manufacturing and knowledge-intensive sector have more influence on the likelihood of owning a tax haven subsidiary by Indian multinationals. JEL Codes: F21, F23, H25, H26

scholarly journals Antitrust Policies and Profitability in Nontradable Sectors

2021 ◽  
Vol 3 (2) ◽  
pp. 251-265
Author(s):  
Timothy Besley ◽  
Nicola Fontana ◽  
Nicola Limodio
Keyword(s):  
Market Power ◽  
Firm Level ◽  
Profit Margins ◽  
Level Data ◽  
Firm Level Data ◽  
Domestic Policies

Firms in tradable sectors are more likely to be subject to external competition to limit market power, while nontradable firms are more dependent on domestic policies and institutions. This paper combines an antitrust index available for multiple countries with firm-level data from Orbis covering more than 12 million firms from 94 countries, including 20 sectors over 10 years and finds that profit margins of firms operating in nontradable sectors are significantly lower in countries with stronger antitrust policies compared to firms operating in tradable sectors. The results are robust to a wide variety of empirical specifications. (JEL D22, E02, L44)

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