Persistence of profitability: Explaining the differences among countries and industries (with Ingrid Eyleerts)

This article determines econometrically the level of persistence of profits, and the differences in such a level, for different Latin American countries (Argentina, Brazil, Chile, Mexico, Peru) and for USA. Furthermore, the paper also evaluates persistence coefficients for individual companies and industries in each country and explains those coefficients. These comparisons are interesting since the questions about the determinants of performance and its persistence have been central to strategic management for several years, and there are no convincing explanations or empirical work that evaluates the variables that explain possible variations in profit persistence across countries. Among our conclusions, we found that, at the country level, external debt, openness to international trade, country risk and foreign investment have a significantly negative impact on the persistence of profits.

Published by:

Academia: Revista Latinoamericana de Administración. Vol. 44. May, 2010.

 

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