Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

Vanja Grozdić, Branislav Marić, Mladen Radišić, Jarmila Šebestová () and Marcin Lis
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Vanja Grozdić: Department of Industrial Engineering and Management, Faculty of Technical Sciences, University of Novi Sad, 21000 Novi Sad, Serbia
Branislav Marić: Department of Industrial Engineering and Management, Faculty of Technical Sciences, University of Novi Sad, 21000 Novi Sad, Serbia
Mladen Radišić: Department of Industrial Engineering and Management, Faculty of Technical Sciences, University of Novi Sad, 21000 Novi Sad, Serbia
Marcin Lis: Faculty of Applied Sciences, WSB University, 41-300 Dąbrowa Górnicza, Poland

Sustainability, 2020, vol. 12, issue 4, 1-18

Abstract: The main goal of this study was to examine the effects of capital investments on firm performance, using panel-data analysis. For this purpose, financial data were gathered for 60 manufacturing firms based in Serbia, in the period from 2004 to 2016. The main research hypotheses were developed in accordance with the definition, nature, and time aspect of capital investments. Therefore, empirical expectation of this study was that the relationship between capital investments and firm performance should be positive—they probably bring losses to the firm in the short term, but they should increase firm performance in the long term. Finally, the results have indeed shown that capital investments have statistically significant negative effect on the short-term performance, but positive effect on the long-term performance of the analyzed firms, while controlling for time-fixed effects and certain internal factors.

Keywords: capital investments; firm performance; profitability; sustainability; panel data (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:4:p:1689-:d:324598

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