The determinants of firm profitability: An analysis on Philippine publicly listed companies

• Main Authors: Arvesu, Franz Nicole R., Co, Kalvin Harris S., Rivera, Rex Wilbert L.
• Format: text
• Language: English
• Published: Animo Repository 2014
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/11824
• Institution: De La Salle University

As the business environment is ever changing, firms need to adapt to survive. However, many studies published regarding the determinants of firm profitability have mixed results, thus leading into a state of doubt for the best firm practices. In this proposal, the researchers have determined 14 different variables, ranging from 7 categories, such as (1) firm liquidity, (2) debt structure, (3) asset management efficiency, (4) firm size, (5) ownership structure, (6) board structure, and (7) firm age. Their relationships to profitability, as measured by the Return on Assets and Return on Equity, are to be studied using 2009-2013 data from publicly listed firms in the Philippines. This paper aimed to discover, using panel regression and correlation, the multiple facets of a familiar phenomenon, which is firm profitability. In order to address the objectives of the paper, the researchers used descriptive statistics to identify the different trends included in the population of industries. After determining the implications of these data, the researchers used Pearson's correlation to preliminarily identify the relationships between the variables. After the determination of the correlation between the variables, the researchers used panel data analysis to formally determine the effects of each independent variable. These different statistical tools and tests were used on the relevant data from Philippine publicly listed firms from 2009-2013. After proper analysis, the researchers concluded that only firm size and asset management efficiency are the variables that significantly affect firm profitability. These two variables were seen to have a positive effect on an entity's profitability.