The Effect of Macroeconomic Factors on the Profitability of Non-Finance Firms in South Africa

Emmanuel Okofo-Dartey ()
Additional contact information
Emmanuel Okofo-Dartey: University of Education Winneba

Acta Universitatis Danubius. OEconomica, 2024, issue 20(4), 139-158

Abstract: This study examines the effect of macroeconomic factors on the profitability of non-finance firms in South Africa. Using an annual dataset of listed non-finance firms from 2006 to 2022, and employing the Generalized Method of Moments technique results show that, prior profits of the firms positively influence their current profit levels. The study finds that, interest rates negatively affect the profit levels of the firms. Again, the result of the study reveals that while inflation, exchange rates, corporate tax rates, work ethics, and unemployment negatively influence profitability through Return on Assets (ROAs), they impact the profitability of the firms positively through Return on Equity (ROE). Corruption was also found to positively influence profitability through ROA but negatively through ROE. Policymakers are advised to monitor the effects of macroeconomic variables and assess the net effect of the volatility of these variables on the behaviour of non-financial firms in their respective economies to address the various dynamics posed by the macroeconomic factors to firms.

Keywords: Profitability; Non-finance firms; Macroeconomics Variables; Return on Assets; Return on Equity (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dj.univ-danubius.ro/index.php/AUDOE/article/view/2944/2883 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2024:i:4:p:139-158

Access Statistics for this article

More articles in Acta Universitatis Danubius. OEconomica from Danubius University of Galati Contact information at EDIRC.
Bibliographic data for series maintained by Daniela Robu ().