Factors affecting the profitability of Indian listed firms: a panel data approach

Eissa A. Al-Homaidi, Najib H.S. Farhan, Waleed M. Alahdal, Amgad S.D. Khaled and Moatasem M. Qaid

International Journal of Business Excellence, 2021, vol. 23, issue 1, 1-17

Abstract: The aim of this study is to empirically investigate the factors that affect the profitability of 1,308 listed firms operating in Bombay Stock Exchange (BSE) in India for the time period from 2011 to 2018. The research uses (pooled, fixed and random effect) models. Profitability is the dependent variable measured by three indicators which are return on equity (ROE) and earning per share (EPS). Liquidity (CR), leverage (LEV), company efficiency (CEFF), firm size (FSIZE), and working capital (WC) are considered as independent variables. The results of the study show that leverage, company efficiency, and firm size have a strong relationship with profitability measured by ROE. The results also reveal that company efficiency and firm size have a positive association with firms' profitability measured by ROE and EPS. The current research has three practical implications. First, it seeks to fill an existing gap in the literature of listed firms' profitability in Indian firms. Second, it provides new empirical evidence using different statistical analysis tools as a methodological contribution and used new variables. Finally, the present study brings useful insights and empirical evidence on the factors affecting profitability of Indian listed companies which are very beneficial for both internal users and external.

Keywords: banks' profitability; liquidity; leverage; efficiency; working capital; India. (search for similar items in EconPapers)
Date: 2021
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