A research for the competitive environment hypothesis in the short-run for the Turkish manufacturing industry

Omer Iskenderoglu and Ilhan Ozturk

Economic Research-Ekonomska Istraživanja, 2016, vol. 29, issue 1, 140-147

Abstract: The competitive environment hypothesis is one of the basic ideas in mainstream economic theory. It states that the competitive process eliminates all economic profits and losses in the long-run so profits do not persist. This article studies the competitive environment hypothesis of 125 Istanbul Stock Exchange (ISE) quoted manufacturing firms that survived during the period of 2009:1–2010:4, which can be considered as the short-run. Net income after tax to total assets (return on assets [ROA]) and net income after tax to total equity (return on equity [ROE]) are both used as profit measures. Starting with Levin et al. and Im et al.’s panel unit root tests, pooled Ordinary Least Squares (OLS), panel fixed effects and cross-sectional analysis are employed. The results indicate that competitive environment hypothesis is viable and profits do not persist in the short-run.

Date: 2016
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DOI: 10.1080/1331677X.2016.1163948

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