A Dynamic Panel Analysis of the Profitability of Australian Tax Entities

Simon Feeny, Mark Harris and Joanne Loundes
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Joanne Loundes: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper investigates the determinants of profitability of Australian tax entities over the period 1993/94 to 1996/97 for each of 91 three-digit ANZSIC industries. The theoretical model is based on that of Cowling and Waterson (1976). However, it is augmented by the inclusion of lagged profitability to allow for habit persistence in entity profitability. The so-called operational Wansbeek-Bekker estimator is used to control for endogeneity of this lagged dependent variable, whilst simultaneously controlling for observed and unobserved entity heterogeneity. Aggregate results suggest that profitability in the previous year, entity capital intensity, and barriers to entry have the expected positive association with current profitability measured by the price-cost margin. Entity market share-and to a lesser extent concentration-are found to have a U shaped relationship with profitability.

JEL-codes: C23 F18 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2000-09
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (1)

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http://melbourneinstitute.unimelb.edu.au/downloads ... series/wp2000n22.pdf (application/pdf)

Related works:
Journal Article: A dynamic panel analysis of the profitability of Australian tax entities (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2000n22

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