Does Firm Size Affect Profitability? An Empirical Investigation Of Indian Textile Industry

Dr. Harish Kumar Singla

Paradigm, 2011, vol. 15, issue 1-2, 18-25

Abstract: The present study examines the relationship of firm’s size and profitability, taking into consideration two size variables i.e. Net sales and Total Assets and three profitability variables i.e. PAT/Net Sales, PAT/Total Assets and ROCE of 142 Indian Textile Companies for a period of 10 years that is, from 2001 to 2010. The hypothesis of firm Size affect profitability was tested using nine regression equations in panel data using fixed effects. The empirical findings suggest that firm’s size emerges as an important factor affecting profitability. In terms of the direction, the results show mixed evidence; firm’s size is negatively affecting the PAT/Net sales variable, whereas affecting positively to other variables. The study concludes that the validity and the generalization of the findings are pending future research in other industries or sector.

Keywords: Profitability; Size; Textile; PAT/Net sales; PAT/Total Assets; ROCE; Net sales; Total Assets JEL Classification: - C23, G32, L67 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:sae:padigm:v:15:y:2011:i:1-2:p:18-25

DOI: 10.1177/0971890720110104

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