Profitability and Firm Size–Growth Relationship in Construction Companies in Malaysia From 2003 to 2010

Devinaga Rasiah (), David Yoon Kin Tong () and Peong Kwee Kim ()
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Devinaga Rasiah: Faculty of Business, Multimedia University (Malacca Campus), Malaysia
David Yoon Kin Tong: Faculty of Business, Multimedia University (Malacca Campus), Malaysia
Peong Kwee Kim: Faculty of Business, Multimedia University (Malacca Campus), Malaysia

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2014, vol. 17, issue 03, 1-19

Abstract: In this study, we intended to examine empirically how a firm's profitability performance would impact its growth process and the inference for Gibrat's Law. The basic study looks at small, medium and large firms' tendency to grow when their internally generated profits are high. The sample is 124 construction companies listed from years 2003 to 2010 at BURSA Malaysia. Data used is secondary data collected from BURSA Malaysia and annual reports. The result indicated that "growth" contributed significantly to profitability in both small and medium-sized construction companies, but was not significant in large companies. Thus, hypothesis two was supported. This study supports Gibrat's Law, showing that size and growth rate are independent.

Keywords: Size; profitability; construction companies and growth (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219091514500143

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